BREAKING NEWS
Jetstar's new routes are Nelson, Napier, New Plymouth, and Palmerston North ... More soon
Close

Govt denies tax gouge accusation

TOM PULLAR-STRECKER
Last updated 10:41 19/11/2012

Relevant offers

National business

'Some industries dominated by women': John Key on midwives' pay Nelson, Palmerston North two of Jetstar's new NZ routes Calls for Kiwis stuck in rent trap to be given incentives to save How 7-Eleven workers are being ripped off in Australia Cloud-based accountancy firms Spotlight Reporting and RightWay in partnership 'Stripey' rain brings relief for some Earnings takeaways: some spark but not much fire Mainfreight boss takes swipe at Steven Joyce over rail and technology Otaki entrepreneur's award-winning wheelchair Focus turns to US Fed moves as China slowdown looms

The Government has insisted a controversial proposal to change the tax rules for employers that pay for employees' broadband, home phone, meal and accommodation costs is not designed to raise extra money.

Consulting firm Deloitte warned the changes, set out by Inland Revenue in a discussion document last week, could make it harder for businesses to pay for employees' work-related broadband and phone use.

Inland Revenue has suggested such "fringe benefits" should be taxed in full, unless employers were able to clearly separate out employees' personal and business use.

Deloitte New Zealand chief executive Thomas Pippos said that was pretty hard for employers to do, which would mean such benefits were likely to be taxed in full under the proposed new regime. At the moment it was sufficient for employers to estimate a split.

However, a spokesman for Revenue Minister Peter Dunne said the changes would make it easier for businesses as they would "know more clearly what is required of them".

Broadband and phone payments would "only be taxable in full where the private/work element cannot easily be separately identified".

Overall, the changes proposed by Inland Revenue were expected to be "revenue neutral", he said.

Pippos had no estimate of how many people had their home broadband and phone bills paid by their employer, but said the number was only likely to grow.

"The fact is everyone lives with their smartphones, laptops and iPads. What is work and not work ... these are just part of people's lives now and the boundaries are difficult to ascertain."

Inland Revenue's proposal was floated just days after Communications Minister Amy Adams helped launch "National Teleworking Week" in Parliament's Grand Hall, saying that working from home had the potential to reduce fuel consumption and traffic congestion and even-out the cost of housing.

Pippos thought the Government would not have made the connection between its support for teleworking and the proposed tax changes and believed Inland Revenue would probably reconsider its approach.

Dunne's spokesman denied there was irony in the timing of the tax paper. "There can be no irony in making existing requirements clearer and simpler to understand. That would generally be considered good government practice," he said.

Inland Revenue has also canvassed changes to the tax treatment of work-related accommodation and meals that Deloitte welcomed as pragmatic.

These would remove a theoretical obligation on employers to pay certain taxes on one-off and short term benefits that it accepted were never imposed by employers - such as on the savings employees made on their regular grocery bills when they got a work-paid meal - while toughening up on regular and long-term benefits.

Ad Feedback

The deadline for submissions on the proposed changes is February 1. Pippos said Deloitte was likely to make a "pragmatic" submission suggesting phone and broadband benefits should be split "50:50", with half of payments subject to tax.

- BusinessDay.co.nz

Comments

Special offers

Featured Promotions

Sponsored Content