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Inland Revenue

Tax Policy

PUBLISHED 3 October 2012

Announcement on salary-trade-off decisions

The Minister of Revenue issued a media statement today setting out the Government’s decisions on new rules for salary traded off as income. For more information, see the media statement.

Hon Peter Dunne
Minister of Revenue

3 October 2012

Media statement

Dunne: decisions on salary trade-offs follow consultation

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:

  • A wider set of car parks provided to employees are to be taxed, through the FBT (Fringe Benefit Tax) rules. The new FBT rules will focus predominantly on car parks provided to employees in the Auckland and Wellington CBDs (the areas where the benefits to the employee are greatest). There will be certain exclusions, for example, for car parks used by work vehicles, for late night shifts and disabled car parks. To reduce compliance costs, standard values will apply when the car park is not provided through a commercial car park operator.
  • Explicit salary trade-offs involving vehicles and car parks, as well as vouchers, such as grocery or petrol vouchers will be included in the definition of income used when calculating social assistance entitlements and obligations.

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.


Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985