Streamlining the taxation of fringe benefits
  

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  NZ Government Crest

Hon Dr Michael Cullen
Minister of Finance
Minister of Revenue

  
  

Contents

Part one: Introduction

Chapter 1 - Introduction
Objectives of the review
The scope of this discussion document
Summary of proposals
Other key decisions
Submissions are invited

Part two: Fringe benefit tax

Chapter 2 - Policy framework
What should be a taxable benefit?
Valuing benefits

Chapter 3 - Current fringe benefit tax rules

Trade-off between accuracy and lower compliance costs
Availability for use versus actual use
Value of benefit to employee

Chapter 4 - Who should pay the tax?

Part three: Major issues

Chapter 5 - Valuation of motor vehicle benefits
Current treatment
The valuation basis - cost or book value
Proposal
Availability for private use
Leased vehicles
Availability on a daily basis

Chapter 6 - Work-related vehicles

Current law and problems
Comment
Options
Logo requirement
Emergency call-outs

Chapter 7 - Car parks

Introduction
Problems with the current law
Policy intent
Proposal
Chapter 8 - Valuation of car parks
Background
The cost to the employer
Market value to the employee
Options for applying the market value rule
A minimum threshold
Chapter 9 - Multi-rate calculation
Introduction
How the multi-rate calculation works
Problems associated with the calculation
Proposal
How the proposal would work
Low-interest loans
Benefits and risks of the proposal
Other options
Ceasing to employ staff
Chapter 10 - The exemption for charities
Background
Policy arguments
Other issues
Leading conclusion from review
Possible anti-avoidance rule
Tertiary institutions and FBT
Chapter 11 - Loans to employees
Current rules
Policy rationale
Proposal
"Publicly available" interest rates
Comparable to valuation of discounted or free goods and services
Proposal
Chapter 12 - Low-value benefits
Reason for catch-all provision
Specific exemption of employer health and safety-related benefits
Policy rationale
Proposal
Minor unspecified benefits
Proposal
Chapter 13 - Proposed exemptions - use of certain business tools
Use and availability for use of business-related assets
Policy rationale
Proposal

Part four: Minor issues

Chapter 14 - Other exemptions
Income protection insurance
Third party provided benefits
On-premises exemption
Travel costs when employee posted overseas
Work-related clothing
Chapter 15 - Other issues
Anti-avoidance rule
Interaction with share option schemes
Value of transport benefits
Policyholder loans
Changes to election provisions in subpart ND
Appendix: Motoring costs for petrol-driven vehicles estimated on 14,000km per year, first five years of ownership

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First published in December 2003 by the Policy Advice Division of the Inland Revenue Department, PO Box 2198, Wellington.

Streamlining the taxation of fringe benefits - a government discussion document.
ISBN 0-478-27112-3