Car parks, land-related payments in SOP changes

Tuesday 11 December 2012, 7:48PM
By Peter Dunne

Changes to the tax treatment of employer-provided car parks, lease inducement payments and lease surrender payments, and including more non-cash benefits in income calculations for social assistance entitlements are key proposals being added to a tax bill before Parliament, Revenue Minister Peter Dunne said today.

Mr Dunne said the changes were in a Supplementary Order Paper (SOP) to the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters Bill released today.

“These are adjustments to the initial proposals following on from the public consultation process earlier this year,” he said.

He said public submissions on the proposed salary trade-off changes resulted in adjusted proposals to focus mainly on employer-provided car parks.

A wider set of car parks provided to employees (predominantly in Auckland and Wellington CBDs) will be taxed, through the fringe benefit tax (FBT) rules.

“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,” Mr Dunne said.

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 1 April 2013.

Mr Dunne said that the reform will make the tax treatment of lease inducement payments and lease surrender payments fairer and more efficient for businesses.

“The Government is focused on supporting businesses to help grow our economy. One way we can help through the tax system is by removing distortions where business decisions are influenced, not by prudent investment factors, but by tax consequences.

“Non-taxable lease inducement payments and non-deductible lease surrender payments are just such distortions and so we are going to remove them,” he said.

The SOP also contains a range of other measures.

A 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.