GST on Fringe Benefit

Generally, output tax has to be returned by an employer on the provision of fringe benefits.

Two situations

If a taxpayer wants to use business assets for private use, the taxpayer will need to make a GST adjustment because GST must be paid on assets used for private use.

For example, a taxpayer purchased a boat for both business use and private use and the percentage is 50% to 50%. The 50% of the GST paid can be claimed back (IRD Adjustment for mixed-use assets).  

GST on fringe benefits is also an adjustment, but it is entered separately on A fringe benefit tax return. This adjustment applies to registered persons who are employers and are liable for FBT.

·         If you're a sole trader, partner, trust member, or an associated person, and you have used business assets for private use, you account for the adjustment in Box 9 on your GST return.

·         If an employee (including shareholder-employee) has used business assets for private use, the employee accounts for the GST in your fringe benefit tax return for the period.

Calculations

Fringe benefits that are GST-exempt supplies will not include any GST component, so their taxable value is GST-exclusive. Examples are low-interest loans, overseas travel and life insurance. However, for the rest of fringe benefits, they are valued on GST-inclusive amount.