Section RD 61 — Income Tax Act 2007: Small business option

RD 61 Small business option When this section applies (1) This section applies when an employer provides a fringe benefit to an employee who is not a shareholder-employee in a tax year if, for the preceding tax year,— (a) the gross amounts of tax for both PAYE income payments and employer's superannuation cash contributions withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for the tax year were no more than $500,000; or (b) the employer did not employ any employees. Annual basis (2) The employer may choose to pay their FBT liability on an annual basis, informing the Commissioner of their decision in writing or by telephone no later than— (a) 30 June in the relevant tax year; or (b) the last day of the quarter in which the employer first starts employing employees, if subsection (1)(b) applies. Rate or calculation (3) The employer must pay FBT on the taxable value of fringe benefits in the tax year in which they make their election and in later tax years either— (a) at the rate of 49.25% of the taxable value of a fringe benefit; or (b) by calculating for the relevant tax year the total pay of each employee under sections RD 50 and RD 53 . Replacing rate with calculated amount (4) Despite subsection (3), the employer may ask the Commissioner to replace the FBT liability determined under subsection (3)(a) with a calculation under subsection (3)(b). The employer must provide the information necessary for the calculation. Quarters in year (5) For the purposes of subsection (3), the tax year is treated as if it were 4 consecutive quarters. More than 1 business (6) If an employer ceases business and starts a new business, or operates 2 or more businesses at the same time, the total of all amounts of tax withheld under section RA 5(1)(a) and (c) must be aggregated. Defined in this Act: amount of tax , business , Commissioner , employee , employer , employer's superannuation cash contribution , employer’s superannuation contribution , FBT , fringe benefit , gross , pay , PAYE income payment , quarter , shareholder-employee , tax year , Compare: 2004 No 35 ss ND 1(2)(c), (4), (5) , ND 13 Section RD 61(1)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 518(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RD 61(1)(a): amended (with effect on 1 April 2009), on 6 October 2009, by section 518(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RD 61(1)(a): amended, on 1 April 2009, by section 19 of the Taxation (Business Tax Measures) Act 2009 (2009 No 5). Section RD 61(3)(a): amended, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 70(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27). Section RD 61(3)(a): amended (with effect on 1 April 2010), on 28 May 2010 (applying for the 2010–11 income year and later income years), by section 70(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27). Section RD 61(3)(a): amended, on 1 April 2009, by section 9(1) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105). Section RD 61(6): amended (with effect on 1 April 2008), on 6 October 2009, by section 518(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RD 61 list of defined terms employer's superannuation cash contribution : inserted (with effect on 1 April 2008), on 6 October 2009, by section 518(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).