Experts say Govt carpark tax is a backdown
MARIA SLADE AND VERNON SMALL
Tax advisers say the government's watered down new rules on salary trade-offs is the second tax backtrack in as many weeks.
Yesterday Revenue Minister Peter Dunne announced the government would target employer-provided carparks as it moves to tighten the tax rules on perks used as trade-offs for salary.
It follows an April 2012 issues paper "Recognising salary trade-offs as income" proposing a much tougher set of rules.
"We have listened to public submissions and the proposed new rules are now narrower than originally suggested, focusing predominantly on employer-provided car parks," Dunne said.
The specific changes would tax more car parks provided to employees through the FBT (Fringe Benefit Tax) rules, mainly in the Auckland and Wellington central business districts where the benefits to the employee are greatest.
Accountancy firm PwC said the original proposals were much wider reaching, seeking to tax all salary trade-offs in some form.
Yesterday's move followed the government's backtrack last week on lease inducements paid by commercial property owners to secure tenants.
"This is the second significant softening in recent days to a tax policy put out for consultation," tax partner Geof Nightingale said.
"Last week, in response to strong concerns, the Government backed off from an Inland Revenue proposal to tax lease inducements from the date of announcement and instead pushed the application date forward to 1 April 2013.
"While it is great to see Government and Inland Revenue listening and responding to submissions, it does beg the question of whether these tax policy change proposals are being put out under-cooked by Inland Revenue."
Hamilton PwC partner Michael Bignell said it was starting to look like a deliberate strategy. "They put out proposals in the extreme then dial them back to be a bit more palatable."
Under the proposed new salary trade-off rules, there will be exclusions for car parks used by work vehicles, for late night shifts and disabled car parks. A standard value will be put on a car park when it is not provided through a commercial car park operator.
The new rules will replace the current on-premises/off-premises distinction for determining whether a car park is subject to FBT.
"The changes are about ensuring that tax is applied fairly, but without imposing undue compliance costs," Dunne said.
Explicit salary trade-offs involving vehicles and car parks, as well as vouchers such as grocery or petrol vouchers, would be included in the definition of income used when calculating social assistance entitlements and obligations.
The current FBT treatment for charitable organisations will be retained, but would clarify that the charitable organisations' FBT exemption will not generally apply to vouchers.
The changes will be included in a tax bill scheduled for introduction next month and will apply from April 1, 2014.
Labour's revenue spokesman David Clark said the move amounted to "trying to get blood out of a car park" and was another desperate government attempt to piece together enough money to meet its budget.
"First the Government produced its petty paper boy tax, now it's putting a tax on car parks. What next - grocery vouchers? Actually, it's taxing them too."
Labour would instead bring in "pro-growth tax reform that will ensure speculators pay their fair share".
"National has forgotten that the best way to increase revenue is to boost growth. Labour has a plan to support modern manufacturing and exporters to get growth in the economy and create better jobs."
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