Newsletter

It has been another year of upheaval and constant change.  We are now heading into a slowing economy so 2023 will be challenging.

Does your business need to pay FBT?

Fringe Benefit Tax may apply if you provide perks for any of your employees.

These might include a car they can drive for personal use, personal travel, or a gym membership, for instance.  Deductible entertainment expenses are also subject to FBT – vouchers for hitting sales targets, for instance.  Low interest loans and some types of contributions to funds or insurance policies may also be liable for FBT.

Paying tax on these fringe benefits can change the overall cost of employee perks, so you should take FBT into account when you calculate the true price of perks.  Don’t worry, we’re here to help.

Brightline Rules for transfers of properties between family members

Often we hear that families want to transfer an investment property between family members.  The Inland Revenue Department have been very clear that no roll over relief will be provided for close relationship transfers.

Where there is a legal change in ownership taking place within the brightline period (March 2018 onwards), the gain on sale will be taxable to the person (entity) disposing of it.  Furthermore, all family and close relationship transactions that occur at below market value are deemed to have been transferred at market value.  This may give rise to situations where tax is payable on an amount of income that was not actually received by the recipient.

For example, where parents dispose of residential land to their child within the brightline period, the sale will be taxable to the parents based on the market value of the land, regardless of how much the child paid for it.

We ask that you consult with us and your Solicitor before going ahead with any decisions, as the Inland Revenue Department are very diligent on tax recovery in this area.