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Changes looming for FBT

An Official’s discussion paper was released earlier this year which, amongst other things, proposed taxing salary trade-off benefits. Whilst in concept many would believe this to be a move in the right direction, the suggested proposals appeared to be extremely wide.

The Minister of Revenue, Peter Dunne, has now advised that due to public submissions received, the original scope to the proposals has narrowed.

Although perhaps one should be grateful for the change in focus, the proposed changes are still not without significant compliance cost to employers. It also seems that we continue to introduce new legislation that is not a one size fits all and therefore creates extra compliance costs and complexity for the average business to get their heads around.

The following changes are now proposed:

  1. Car parks provided to employees in the Auckland and Wellington CBD will be the only car park targeted. (Perhaps part of a push to move employees to public transport?) There will be some exclusions such as for work vehicles, night shift workers and disabled car parks.
  2. Car parks will be taxed under the FBT rules.
  3. Status quo will remain for charities. i.e. they will continue to be exempt from FBT with one change in respect of vouchers.
  4. Vouchers provided by charities will be subject to FBT.
  5. On the back of other recent changes to social assistance, any salary trade off arrangements will still need to be taken into account when determining the entitlement to social assistance. This will equally apply to employees of charitable organisations.

The changes are still a way off however are expected to become effective from 1 April 2014 once enacted. Once the tax bill has been released hopefully we will have more clarity on the detail to the changes.

If you have any concerns regarding any of the points outlined above we recommend that you seek advice from your Hayes Knight adviser. Alternatively, please contact our Tax Team:

Phil Barlow
Tax Director
T + 64 9 414 5444
E phil.barlow@hayesknight.co.nz

Shelley-ann Brinkley
Senior Tax Manager
T +64 9 414 5444
E shelley-ann.brinkley@hayesknight.co.nz

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