Government seeks employers' views on Fringe Benefit Tax
Employers and other interested parties are being invited to put forward their concerns about Fringe Benefit Tax (FBT), as the first step in the government's FBT Review, Associate Revenue Minister Paul Swain announced today.
Employers pay FBT on non-cash benefits they provide to employees and shareholder-employees. Fringe benefits include goods such as cars, job-related loans and subsidised transportation.
"The review will focus on reducing the difficulty and cost to employers of complying with FBT, while ensuring the revenue base is maintained," said Mr Swain. "It is one of a number of government initiatives concentrated on reducing the tax-related costs of doing business, especially for small to medium-sized enterprises."
FBT was introduced in 1985 to prevent people converting taxable income from employment into non-taxable income such as cars. It ensures that the correct amount of tax is paid on employment income, no matter what form it takes.
"The government has no plans to get rid of fringe benefit tax," said Mr Swain. "However there is scope for improving its effectiveness, simplifying it and reducing the associated compliance costs.
"This is the first major review of fringe benefit tax since it was introduced, and the government wants to make sure the review considers issues that are of real concern to employers and businesses. We know, for example, of several concerns relating to motor vehicles - including valuation, home-to-work use and work-related vehicles. We want to know what other areas of FBT are of concern to employers.
"As a first step, the government is consulting with employers and other interested parties about what issues they think should be covered in the review, and how fringe benefit tax compliance costs can be reduced.
"This consultation phase will be critical in determining the scope of the review, so I am keen for those who have views on how fringe benefit tax could be improved to have input. The next stage of the review process will be the release of a discussion document, in mid-2003, setting out proposals for change followed by opportunities to comment on that document. Any legislative changes resulting from the review will be introduced in 2004," said Mr Swain.
Interested parties should send their comments to:
Fringe Benefit Tax Review
The General Manager
Policy Advice Division
PO Box 2198
The deadline for submissions is Friday 13 December.
Andrew Janes - Press Sec for Paul Swain - 04 4719889/021 270 9106 or [email protected]
For other releases by Paul Swain: www.beehive.govt.nz
For business information from the government: www-nzbusiness.govt.nz [site no longer available - see Internet Archive for archived version]