Given the importance of keeping your PAYE and GST record-keeping and payments in order, it might be tempting to think that Fringe Benefit Tax, or FBT, is a relatively minor thing. But don’t be fooled. In 2017, Inland Revenue created a dedicated audit team to focus on this issue.
One of the team’s aims is to ensure employers have the right business structures and documentation in place. And it turns out that many don’t.
If this sounds like you, now’s a good time to put things right. Regardless of whether you’re acting correctly or not around FBT, a lack of proper records leaves you in a weak position and liable to negotiated settlements (that is, having to pay more than you expected) or, worse, serious penalties.
Most FBT revolves around company vehicles, so let’s look at what IRD expect from you if you provide one to any of your staff:
• The employee’s job description and employment contract
• The company policy on motor vehicles
• Any private use restriction letter in place, signed by the directors and the employee
• Documentation that shows regular checks on the vehicle to ensure it’s not being used for private matters
• The employee’s performance review notes confirming they’re sticking to company policies.