Changes to fringe benefit tax (FBT)

Recent changes to New Zealand’s fringe benefit tax (FBT) rules came into effect on 1 April 2026. If your business provides staff benefits, now is a good time to review how those benefits are taxed.

For official guidance, see Inland Revenue’s update here: Fringe benefit tax changes now in effect.

What is fringe benefit tax?

Fringe benefit tax applies when an employer gives a non-cash benefit to an employee because of their job. In New Zealand, the employer usually pays the tax, not the employee.

Common examples include company vehicles for private use, gift cards, low interest or interest free loans, subsidised gym memberships, staff discounts, and some insurance benefits.

How fringe benefit tax works

FBT is worked out on the taxable value of the benefit. It is separate from PAYE, which applies to wages and salaries.

The main types of taxable fringe benefits include:

• Motor vehicles available for private use.

• Free or discounted goods and services.

• Low interest or interest free loans.

• Employer contributions to some insurance and superannuation arrangements.

If your business provides taxable fringe benefits, you may need to register for FBT with Inland Revenue.

What changed from April 2026?

Inland Revenue has introduced more flexibility for some benefits. In some cases, employers can now choose whether to apply FBT or treat the benefit as employment income and deduct PAYE.

These changes apply to gift cards, some employee reimbursements, unbranded personal protective equipment, and motor vehicles where Investment Boost has been claimed.

Gift cards

Employers can now choose whether some gift cards are taxed under FBT or treated as employment income through payroll with PAYE deducted.

Employee reimbursements

For some reimbursements that would otherwise be unclassified benefits, employers may now have the option to use either FBT or PAYE treatment, depending on the facts.

Health and safety equipment

Unbranded personal protective equipment is now exempt from FBT. This does not apply to all health and safety items, so the exact item still needs to be checked.

Motor vehicles and Investment Boost

There are also new rules for FBT on motor vehicles where the Investment Boost deduction has been claimed. Inland Revenue has updated the way these vehicles are valued for FBT.

Why this matters

These changes may make reporting easier for some businesses. But they also mean employers need to check that benefits are being treated correctly.

A review now can help you avoid mistakes, keep payroll records accurate, and reduce the risk of later compliance issues.

Review your FBT position

If you’re unsure whether you have the right tax treatment for your employee benefits, come and talk to our team. We can review your current employee benefits and how they may be affected by the recent changes to FBT legislation and compliance.