Tax Administration (Fringe Benefit Tax, Interest on Loans) Determination 2026

Tax Administration (Fringe Benefit Tax, Interest on Loans) Determination 2026

This determination is made under section 90B of the Tax Administration Act 1994 by the Commissioner of Inland Revenue.

Determination

1. Title

This determination is the Tax Administration (Fringe Benefit Tax, Interest on Loans) Determination 2026.

2. Commencement

This determination comes into force on 1 October 2026.

3. Rate of interest for quarter commencing 1 October 2026 and subsequent quarters

The prescribed rate of interest that is to apply to employment related loans for the quarter commencing 1 October 2026 and all subsequent quarters, for which no further rate is prescribed, is 6.07%.

This determination was made in Christchurch on the 26th day of August 2026.

Stephen Donaldson

Technical Lead

Inland Revenue

Explanatory Note

This note is not part of the determination but is intended to indicate its general effect.

The fringe benefit tax rules capture non-cash benefits provided to employees. Included in the definition of “fringe benefit” is any employment-related loan on which the employer is charging a rate of interest that is below the market rate. The interest differential is a fringe benefit for the purposes of the fringe benefit tax rules.

Under section 90B of the Tax Administration Act 1994, the Commissioner may, from time to time, determine the prescribed rate of interest applying to employment-related loans for the purposes of calculating the value of any fringe benefit provided. 

The prescribed rate is used as a proxy for the market rate of interest to save employers the compliance costs associated with determining the market rate relevant to loans they have provided to their employees.

Once a rate is set, it remains the prescribed rate until changed by a subsequent determination under section 90B of the Tax Administration Act 1994.

This determination increases the fringe benefit tax prescribed rate of interest for employment-related loans from 5.77% to 6.07%. The new prescribed rate of 6.07% applies for the quarter beginning 1 October 2026 and subsequent quarters.