Tax Updates: 3 November 2025

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

FBT exclusion for Health & Safety

One of IR’s latest draft Questions We’ve Been Asked (QWBA), considers the Fringe Benefit Tax (FBT) exclusion, which is available for employer-provided benefits which relate to health and safety in the workplace. The draft QWBA is titled “When does the fringe benefit tax exclusion for benefits relating to health or safety apply?” and is referenced PUB00507. 

Legislatively, the exclusion can be located in s. CX 24, and for it to apply, you need to tick 3 boxes: 

1. Is the benefit related to the employee’s health or safety?
    
2. Is the benefit aimed at managing risks to health or safety in the workplace as provided under the Health and Safety at Work Act 2015 (HSWA)? and, 
    
3. Would the benefit meet the requirements for the ‘on-premises’ exclusion if the employer provided the benefit on its premises? 

The first two tests are essentially a nexus test, connecting the benefit being provided to the employee, with the employer’s duty to manage risks to health and safety under the HSWA – identify actual and potential risks to health and safety and, where it is reasonably practicable, eliminate or minimise the risks. 

To satisfy this nexus test, clearly the benefit must be sufficiently targeted at a particular health or safety risk, and not just relate to an employee’s general health and wellbeing. In this regard, the onus will be on the employer to show that both the risk they identify and their assessment that the benefit will eliminate or mitigate that risk was based on a reasonable evaluation.  

While the QWBA is focused on FBT and therefore the provision of non-cash benefits, IR also makes the point that the commentary would equally apply to cash payments made to an employee – say reimbursement of the cost of a flu vaccination – and potential application of the s. CW 17D exempt income provision.  

The QWBA is a 19-page document and concludes with numerous examples to illustrate the commentary, as well as a useful table which outlines a number of common possible benefits provided by employers and IR’s view as to application of the FBT exclusion to the benefit. 

If you would like to make a submission on the draft, you must do so no later than December 12th.  

This article was originally published through the ‘A Week In Review’ newsletter. If you would like to receive Richard’s tax updates every Monday morning, you can subscribe here.