GST On Fringe Benefits Vs FBT Return
GST on a fringe benefit is calculated in the fringe benefit tax return. Inland Revenue says you pay it on the taxable value of most benefits you provide. The formula is the taxable value times 3 divided by 23.
That GST is not included in your GST return. A payment the employee makes toward the perk is a different amount. That payment goes in your GST return and in your income tax return.
times 3 divided by 23
equals the GST to pay on the FBT return
That formula is on Inland Revenue’s GST for FBT returns page. The short step on FBT for employers stops at the same line. This page is the split between the two returns. Price the taxable value on the FBT calculator first. The fraction itself is the one the GST calculator uses when you take GST out of a GST inclusive amount. On the FBT return the base is the taxable benefit value.
FBT return
GST on most taxable benefits lives here. Paper returns start from box 3, take off GST exempt and zero rated taxable benefits and other exempt supply adjustments, then apply value times 3 divided by 23. Enter that GST in box 7 on a quarterly return, or box 6 on an income year or annual return. In myIR, the GST exempt and zero rated taxable fringe benefits field recalculates the GST.
GST return
The GST you just calculated for FBT does not go in this return. What does go here is a contribution the employee pays you toward the perk. Inland Revenue says that payment must be included in your GST return and your income tax return. The contribution also comes off the taxable value before FBT is worked out.
How to enter it
What has no GST on this line
| What you provided or received | GST on the FBT return |
|---|---|
| Most taxable fringe benefits | Yes. Value times 3 divided by 23, after the adjustments above. |
| Low interest loans | No GST. The loan can still be a fringe benefit. The rate sits on low interest loan prescribed rate. |
| Other financial services | No GST on the FBT return. |
| International travel | No GST on the FBT return. |
| Contributions to employee superannuation and life insurance | No GST on the FBT return. |
| Employee contribution you receive | Not this line. Include the payment in the GST return and the income tax return. It also reduces taxable value. |
Inland Revenue’s list on the GST for FBT returns page is those four groups: low interest loans, other financial services, international travel, and contributions to employee superannuation and life insurance. Some calculators add medical insurance or residential accommodation to a no GST list. That extra pair is not on the page opened for this guide. Stay with the four groups Inland Revenue prints there. More detail is in Part 8 of the fringe benefit tax guide, IR409, which that same page points to.
Do not run times 3 divided by 23 on the FBT tax you are about to pay. Inland Revenue’s common FBT mistakes page names that as an error: calculating GST on the FBT value, instead of the taxable benefit value. The same page names including GST on exempt benefits such as loans, and a wrong GST adjustment for exempt, zero rated, or mixed use supplies.
Do not put that FBT GST into the ordinary GST return. Inland Revenue: GST calculated in your FBT return is not included in your GST return. Coding it back in is the error advisers keep finding. If you are not GST registered, myIR is 0.00 and a paper return leaves the GST box blank. If you were registered for only part of the period, GST applies only to taxable benefits provided while you were registered.
Three New Zealand cases
Dunedin bakery, GST registered
Staff hampers go on the FBT return at their taxable value. GST on that value is value times 3 divided by 23 inside the FBT return, box 7 if the return is quarterly. Action: leave that GST out of the next GST return.
Wellington firm, staff loan
A low interest loan to an employee is on Inland Revenue’s no GST list for this line. Action: do not add GST on the loan in the FBT GST field. If the loan is still a fringe benefit, work that FBT separately. Do not treat “no GST” as “no FBT”.
Nelson sole trader, not GST registered
A benefit is still on the FBT return if the FBT rules apply. Action: in myIR enter 0.00 in the GST amount. On paper, leave the GST box blank. Do not invent a GST figure because a supplier charged GST on the thing you bought.
What people mix up
On r/PersonalFinanceNZ, people talk about journaling private use instead of filing, or about GST landing in the next GST return when a contribution is adjusted. A contribution reduces the taxable value, and the payment itself belongs in the GST return and the income tax return. It does not delete the FBT return, and it does not move the GST on the benefit into the GST return. Quora and Medium this run had no New Zealand thread that states the FBT GST formula.
A 2022 adviser note describes the same trap: claiming the GST portion again in the company GST return. A 2015 note says the same thing in older rate language. A New Zealand FBT GST calculator prints the matching formula, value times 3 divided by 23, then builds its own dollar example. This guide does not reprint that homemade GST or FBT bill. Firm pages that call the line a deemed supply are describing the same split Inland Revenue prints in shorter words: GST is calculated in the FBT return, and it is not included in the GST return.