Common Q&A PAYE or FBT? :

We sometimes see confusion over the treatment of benefits and whether they are subject to FBT or PAYE. The general rule is that if there is a contractual obligation for an employee to pay for an item and they are reimbursed for the item then that reimbursement will be subject to PAYE.

However, if it is the employer’s contractual obligation to pay for the item that is provided to the employee then this will be subject to FBT. The one exception to this rule relates to the provision of accommodation costs, which are always dealt with under the PAYE rules, regardless of the arrangements in place.

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