Revenue Minister Peter Dunne announced today that Cabinet had made its final decisions on the suggestions outlined in the April 2012 issues paper Recognising salary trade-offs as income.
“We have listened to public submissions and the proposed new rules are now narrower than originally suggested, focusing predominantly on employer-provided car parks,” Mr Dunne said.
Specifically, Cabinet has agreed on the following changes:
The new FBT rules will replace the current on-premises/off-premises distinction for determining whether a car park is subject to FBT.
“The changes are about ensuring that tax is applied fairly, but without imposing undue compliance costs,” Mr Dunne said.
“Consequently, the current FBT treatment for charitable organisations will be retained. For example, the car park FBT changes will not apply to charitable organisations except where FBT currently applies, such as for employees of businesses run by charitable organisations,” he said.
The new rules, however, would clarify that the charitable organisations’ FBT exemption will not generally apply to vouchers. Also employees of charitable organisations will not be exempt from the changes as they apply to social assistance.
“These proposed rules enhance the integrity of the tax and social assistance systems meaning greater fairness between those that receive non-cash benefits as part of their remuneration and those that receive only cash remuneration” Mr Dunne said.
The changes will be included in a tax bill scheduled for introduction next month and will apply from 1 April 2014.