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Dunne Releases NZ Budget Tax Measures

by Mary Swire, Tax-News,com, Hong Kong

12 December 2012

New Zealand's Revenue Minister Peter Dunne has released a supplementary order paper (SOP) which implements the changes to the tax treatment of employer-provided car parks and land-related payments first announced in the Budget earlier this year.

The measures are included in a SOP to the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill. Some adjustments to the original Budget proposals have been made, Dunne said, based on the results of public consultations.

In particular, public submissions on the planned salary trade-off reforms have resulted in changes to the government's proposals. The focus will now be mainly on employer-provided car parks, Dunne explained. Under the changes, a wider set of car parks provided to employees will be taxed through the fringe benefit rules (FBT) rules. The rules will apply predominantly to car parks provided to employees in the Auckland and Wellington Central Business Districts, where the benefits to the employee are greatest.

Dunne said: “These changes enhance the integrity of the tax and social assistance systems by providing a fairer, more equal, way of treating those who receive non-cash benefits as part of their remuneration and those who receive only cash remuneration."

Another adjusted proposal in the SOP is to treat lease inducement payments and lease surrender payments as taxable income for the recipient and tax deductible expenditure for the payer from April 1, 2013. The aim is to make the tax treatment of such payments fairer and more efficient for businesses. According to Dunne:“Non-taxable lease inducement payments and non-deductible lease surrender payments are just such distortions and so we are going to remove them."

A further review of the taxing of other commercial land-related lease payments, such as lease transfer payments is intended and public consultation on this is expected to take place early next year.

TAGS: tax | business | fiscal policy | revenue guidance | employees | budget | New Zealand | tax reform

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