Tax Alert - Andersen's FBT Update

The Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026 (“Remedial Act 2026”) has been in force since 30 March 2026. It introduces a number of changes to New Zealand’s Fringe Benefit Tax (FBT) rules, aimed at simplifying compliance through clearer rules and reducing employers’ administrative burden and compliance costs.
Below is a summary of the key FBT changes effective from 01 April 2026:

1. One single FBT return for group companies. 

This is a welcome relief for group companies. From FBT quarter starting on or after 1 April 2026, a group of companies can elect to file a single FBT return covering all group entities. This means the group can file one single FBT return rather than separate returns for each member company.  This significantly reduces processing and administrative costs, as well as duplication, particularly where benefits are centrally managed or employees move across group entities.

2. Flexible choice between FBT and PAYE for reimbursed unclassified expenses.

The confusion around whether certain reimbursed expenses should be taxed under FBT or PAYE is addressed in the Remedial Act 2026. Where an employee is reimbursed for an expense that would have been an unclassified benefit (benefits that don’t fall into a specific FBT category) if provided directly, employers now have the option to tax it under either the FBT or PAYE regime. This gives employers flexibility and removes possible doubt.

3. Open-loop gift cards are officially FBT (not PAYE).

The Remedial Act 2026 confirms that open loop gift cards (such as Prezzy cards) are fringe benefits provided to employees. This removes ambiguity about whether such gift cards should be treated as PAYE income. Compliance is further simplified, as from 01 April 2026 employers can account for FBT at the time the cards are purchased, rather than tracking each card and employee separately.

4. Treatment of Global Insurance Policies with two clear FBT options.

The Remedial Act 2026 provides explicit rules for employers paying a single premium under a global insurance policy covering multiple employees. Employers can choose to between apportioning the premium across employees; and treating it as a pooled (unattributed) benefit and pay FBT at the flat rate. This removes grey areas and allows employers to choose the method that best fits their data and systems.

5. FBT on Motor Vehicle Taxable value ignoring Investment Boost.

The calculation of a motor vehicle’s tax book value for FBT purposes is amended to ignore any accelerated depreciation claimed under the Investment Boost incentive. From 01 April 2026, the FBT value will not reflect the numerical effect of the incentive, but will instead better reflect the actual private benefit received by the employee.

6. Retrospective change on benefits provided by associated companies. 

The Remedial Act 2026 clarifies that unclassified benefits provided by an associated person (for example, another company within the same group) to an employee are subject to FBT. This change applies retrospectively from 1 April 2022. However, a savings provision applies for employers who have already filed on a different basis. The Remedial Act 2026 aligns the law with the general interpretation and practice among employers, thereby addressing the previous technical gap.

While none of these changes introduce new taxes, they do create new opportunities and flexibility. Taking a moment to review how your benefits are structured, especially across groups, vehicles, or reimbursed expenses, can help ensure your FBT treatment remains both compliant and efficient.

Don’t forget about your 31 March 2026 FBT return
Most of the changes outlined above apply on a go-forward basis and are, by and large, welcome. However, they do not remove all of the complexities in applying the FBT rules, for example, ensuring that the correct exempt days are claimed for motor vehicles.

While considering the impact of the forward-looking changes, it would also be timely to undertake a broader review of your FBT positions to ensure ongoing compliance with existing rules. As always, your helpful Andersen Tax Team is here to help and we are just one phone call or email away!