FBT essentials

TABLE OF CONTENTS

• Overview
• Add an FBT subscription to an entity
• Access an FBT return
• Quarterly process
• FBT Settings
  • Return type
  • Auto de-minimis
  • FBT rate
  • Return lock
  • Subsidised Transport
• Start a new FBT tax year
• What's next?

Overview

Calculating Fringe Benefit Tax (FBT) in TaxLab begins by attributing benefits to either employees or pools. The calculation is structured into three main categories: Benefits, Motor Vehicles, and Employees.

Although FBT attribution calculation occurs annually in Quarter 4, it's recommended to allocate benefits to employees quarterly. This makes the year-end process easier and improves accuracy by reducing data entry mistakes.

To complete an FBT return, start by importing benefit and motor vehicle data, then allocate these to employees. TaxLab will automatically calculate the FBT and GST liabilities and consolidate them into the Tax position.

After making any necessary adjustments and completing the true-up process in Quarter 4, the system generates the FBT return. This return can be submitted electronically via myIR or printed for manual filing with Inland Revenue (IRD).

Note: The guidance in these support articles is tailored to the IR420 quarterly return, but the same process generally applies to the IR421 income year return and the IR422 annual return.

Add an FBT subscription to an entity

After an entity has been created in TaxLab, an FBT subscription must be added to begin working on FBT returns. 

1. From the TaxLab homepage, select the name of the entity you want to add a subscription for.
2. Navigate to the Fringe benefit tax tab.
3. Select Add subscription.
4. Select Open Latest FBT Year.

Access an FBT return

There are two ways to access an entity's FBT return:

From the homepage:

1. Locate the entity on the TaxLab Home page.
2. In the Fringe benefit tax column, select Open.

Alternatively you can access the FBT return from the entity’s home page.

1. Select the entity name from the TaxLab Home screen.
2. Navigate to the Fringe benefit tax tab.
3. Select Open latest FBT year.

Both of these options will take you to the most recent FBT year opened. 

Quarterly process

Each quarter, managing benefits involves the following steps:

• Review Benefit categories and check that pooling category settings are correct.
• Add or import benefits, making sure to allocate them to the right employees or pools.
• Review and edit benefits and resulting tax calculations to confirm your data looks accurate for the quarter.
• Delete benefits that are not required or were added or imported by mistake.

FBT Settings

FBT settings should be reviewed at the start of every quarter to ensure they align with the information that is to be provided to Inland Revenue (IR). These settings can be accessed and updated by selecting the "More menu" (...) located in the top right-hand corner.

Return type

The default return type is IR420 quarterly, but it can be changed to IR421 income year or IR422 annual return, depending on the reporting period selected.

Auto de-minimis

This setting is off by default. To turn it on, select the Auto De-Minimis button.

FBT rate

By default, the Low Alternate rate is selected. You can change this to either the Single rate or High Alternate rate:

• Low Alternate rate:
   If used, this results in lower payments in any of the Quarters 1–3 but requires alternate rate calculations and reconciliation in Quarter 4 to true-up your full year position.
• Single rate or High Alternate rate:
  Used in all quarters, generally leads to higher overall FBT payments for the year,  but avoids the need for alternate rate calculations at year-end.

Return lock

To maintain data integrity, individual quarters can be locked using the Return lock slider. This prevents further changes once a quarter is finalised.

Subsidised Transport

By default, the $1,000 threshold applies to subsidised transport benefits. You can change this to Pool all benefits, if that better suits reporting needs.

Start a new FBT tax year

1. Open the entity’s FBT return.
2. In the top-right corner select ‘Goto’.
3. Select the tax year required.

What's next?

Check out FBT import template..