Are NZ charities exempt from FBT?

Generally yes. Charities registered with Charities Services are exempt from FBT on benefits provided to employees while they are carrying out the organisation's charitable, benevolent, cultural, or philanthropic activities. The exemption is in section CX 25 of the Income Tax Act 2007. The main exception is short-term charge facilities (such as petrol vouchers and store gift cards) above the lesser of $1,200 or 5% of the employee's salary, and benefits provided to employees of any non-charitable business operated by the charity.

What is a short-term charge facility for charity FBT?

A short-term charge facility is an arrangement that allows a charity employee to obtain goods or services that have no connection with the charity's operations, where the charity is responsible for the payment. Examples include business credit cards used for private purchases, petrol station vouchers, supermarket gift cards, and pre-loaded store cards. Employment-related loans are specifically excluded from the short-term charge facility definition. FBT applies on these benefits if they exceed the threshold.

How is the charity FBT threshold calculated?

FBT applies to a charity employee if the cumulative value of short-term charge facilities provided to that employee in a tax year exceeds the lesser of $1,200 OR 5% of their gross salary or wages for the tax year. For an employee earning $50,000, 5% is $2,500, so the threshold is the lesser amount of $1,200. For an employee earning $20,000, 5% is $1,000, so the threshold is $1,000. The threshold applies to the cumulative annual value, not per-quarter.

Does FBT apply to a charity-run business?

Yes. Charities that operate a business outside their charitable purpose (such as a charity that runs a commercial trading arm) must register and pay FBT on benefits provided to employees of that business. The general charity exemption only covers benefits provided to employees while they are carrying out the charity's charitable activities. A charity provided car used by a fundraising volunteer is exempt; the same car used by an employee of the charity's commercial business is taxable.

What happens if a charity is deregistered?

If a charity is deregistered or voluntarily wound up and removed from the Charities Services register, the FBT exemption no longer applies from the date of removal. If the charity does not comply with its constitution, the exemption ends from the date of non-compliance. FBT becomes payable from the first day of the quarter or income year after deregistration. The exemption is not back-dated if the charity met its rules until removal.

Charity FBT Calculator NZ | Short-Term Charge Facility Threshold

Charity FBT Calculator NZ 2026

NZ charities registered with Charities Services are generally exempt from FBT on benefits provided to employees carrying out charitable activities. The two big exceptions are short-term charge facilities (vouchers, gift cards, business credit card private use) above the lesser of $1,200 or 5% of salary, and benefits provided in any non-charitable business the charity operates. This calculator works out which of your charity employees are over the threshold and the FBT payable on the excess.

Updated April 2026 Implements section CX 25 (charity exemption) and section RD 39 (short-term charge facility threshold) of the Income Tax Act 2007.

Step 1: Charity status

Is your organisation a registered charity with Charities Services?

If no, the charity FBT exemption does NOT apply. Use the standard FBT calculators instead.

Step 2: Type of benefit being assessed

What kind of benefit are you providing?

Employee	Annual salary	5% of salary	$1,200 cap	Threshold (lesser)	Charge value	Status	FBT taxable
Total taxable value	$0
FBT @ 63.93%	$0

The charity FBT exemption

Section CX 25 of the Income Tax Act 2007 exempts registered charities from FBT on benefits provided to employees while they are carrying out the charity's charitable, benevolent, cultural, or philanthropic activities. This is much broader than other FBT exemptions and reflects the policy that charity resources should not be diverted to administrative tax compliance for genuinely mission-related work. A car used by a charity employee for outreach work, employer-paid parking at a hospice, or accommodation provided to a relief worker are all FBT-exempt.

The two main exceptions

1. Short-term charge facilities

Section RD 39 carves out short-term charge facilities from the charity exemption. A short-term charge facility is an arrangement that lets the employee obtain goods or services unconnected with the charity's operations, where the charity pays the bill. Examples:

Business credit cards used for personal purchases
Pre-loaded store cards (Farmers, Countdown, Z petrol vouchers)
Open-loop gift cards (Prezzy Card)
Charity-paid utility accounts in the employee's name

FBT applies if the cumulative annual value to a single employee exceeds the lesser of $1,200 OR 5% of the employee's gross salary or wages for the tax year. Once the threshold is breached, FBT applies on the FULL value of the charge facility benefits (not just the excess), similar to the all-or-nothing nature of the standard de minimis rule.

For a $30,000 salary employee, 5% is $1,500, so the threshold is the lesser amount of $1,200. For a $20,000 salary employee, 5% is $1,000, so the threshold is $1,000. The 5% test only matters for low-paid employees.

Employment-related loans (such as advances against salary) are specifically excluded from the short-term charge facility definition.

2. Non-charitable business

If a charity operates a business outside its charitable purpose (such as a charity that runs a commercial trading arm or rents out commercial property), benefits provided to employees of that business are subject to standard FBT rules. The same charity car used by a fundraising volunteer is FBT-exempt; used by the manager of the charity's bookshop business it is FBT-taxable.

What stays exempt

Vehicles provided to charity employees for use during charitable activities
Accommodation provided to charity employees in connection with their work
Insurance premiums paid for charity workers
Subsidised meals at the charity's facilities
Recognition gifts of low value (still subject to standard de minimis as a sanity check)
Health and safety related benefits (vaccinations, eye tests, PPE)

Charity status and deregistration

The exemption applies only while the charity is registered with Charities Services. If the charity is deregistered or voluntarily wound up, the exemption ends from the date of removal from the register. If the charity fails to comply with its own constitution, the exemption ends from the date of non-compliance. There is no back-dating, but FBT becomes payable from the next quarter or income year onwards, requiring the charity to register for FBT and start filing returns.

Sources

This calculator provides an estimate only. Always verify your treatment with a tax adviser or refer to ird.govt.nz. Charities operating both charitable and commercial activities should keep clear records distinguishing benefits provided in each context.

Related calculators

NZ FBT Calculator — for benefits outside the charity exemption
FBT De Minimis Calculator — standard $300 / $22,500 thresholds
FBT Attribution Calculator — if charity has FBT-taxable benefits
FBT Quarterly Return Estimator — build your IR420 return