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CHARTERED
ACCOUNTANTS LIMITED
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NEWSLETTERS
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NEWSLETTER
MAY 2002
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In
this issue:
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•
FBT Issues |
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FBT
ISSUES: Cellphones
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| Cellphones are now a fashion accessory! If you provide cellphones to employees then your staff may have an FBT accessory as well. Cellphones can attract FBT if the employee can use the cellphone to make private calls. Recently there have been cases of IRD staff going through cellphone accounts. The key question is: How much does the employee use the phone? If the cellphone accounts are large, which they may be for some executives or sales people you may have an issue. One way to minimise the risk is to put a restriction on private use in the individual's employment contract or company policy. This has the effect of reducing the business' liability if they are ever questioned by the IRD and may save you penalties if you are found to have a FBT liability Generally there is no FBT on benefits provided to employees on your premises. Private calls made by employees from an office phone will not be subject to FBT. |
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FBT
ISSUES: Is your Home your Workplace?
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For many businesses home is also a place of work. You may have a substantial office in your house and manage aspects of your business from home. The extent of your home office is going to affect the FBT paid by your company. If you are running your business through a company you are probably also a shareholder-employee* of that company and driving a company car. The company must pay FBT on any fringe benefits you enjoy. This will include the company car. If your home is also your workplace then on workdays when you drive your company car to visit clients or suppliers you are travelling from your home-based work office to another work site. This is work to work travel. There is no private travel element and no fringe benefit. Conversely, if you do not use a home office and have an office at separate business premises, your travel from home to your office, clients or suppliers, will be regarded as private travel. This is home to work travel. You have enjoyed a fringe benefit. The company will be accountable for FBT on each day that you drive the company car from home to your business premises as the car was made available for your private use. The IRD has released a draft statement setting out guidelines to help you work out whether your home is a work base. You may be able to use these guidelines to reduce the FBT payable for employees who do significant work from home, e.g. sales and technical reps. If you would like us to consider your business facts in the light of the IRD's statement, please give us a call. * Shareholder-employee - someone entitled to receive a salary, regardless of whether or not a salary is allocated in a particular year. |
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FBT
ISSUE: FBT Interest Rate Change
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The rate of interest used to calculate low-interest, employment related loans has reduced from 7.19% to 6.70% effective 1 January 2002. |
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FBT
ISSUES: GST and FBT
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GST on Fringe Benefits is calculated on the taxable value of the fringe benefit provided to the employee, not on the amount of FBT paid. This is a common error and results in GST underpaid by about 50% in most instances. If you would like any assistance with FBT returns, please give us a call. |
Member of the Institute of Chartered Accountants of New Zealand |
