Journal item - Fringe Benefit Tax review

In December 2003 the Government released a Discussion Document entitled Streamlining the taxation of fringe benefits.  As the title suggests, some of the proposals will streamline matters, but other proposals will in fact increase the amount of FBT payable and/or add further complexity to the FBT regime.

The 'stand-out' good news is the proposal to reduce the taxable value of motor vehicles from 24% to 20% of the vehicle's cost price (or to 36% of the book value of the vehicle, if that proposed option is adopted).  While welcome, the proposal really only recognises the decrease in real terms of motor costs over recent years.

The 'stand out' bad news is that the Government is proposing that the on-premises exemption be removed in relation to car parks.  Currently, most car parks are exempt from FBT on that basis, so its removal will expose affected employers to both a significant tax impost and to increased compliance obligations.

The Discussion Document is available on-line (www.taxpolicy.ird.govt.nz, click on "Discussion Documents") should you require more detail.  The Association has made written submissions on the Discussion Document to the Government, and a more detailed article will follow when the Government response to submissions is known.

Any queries or comments should be directed to Barry Hellberg.