New tax won’t touch traditional perks

Press, 16 January 1985, Page 5

New tax won’t touch traditional perks

PA Auckland Traditional perks such as drinks with the boss or the gold watch for long service will not be subject to the new fringe benefits tax. The Inland Revenue Department, while reluctant to comment on the new tax bill before the House of Representatives; privately said it was interested in taxing only “permanent and continuing benefits which form part of a salary package,” the “Auckland Star” newspaper reports. This was in line with the Budget where the Minister

of Finance, Mr Douglas, first outlined the fringe benefits tax.

He said on November 8 that tax would apply to staff cars and low-interest loans as well as “free or discounted goods and services (which would) also be taxed where administratively practical.” The Inland Revenue Department admitted that it was not administratively practical to tax an employer who occasionally bought his staff drinks, but where he regularly took specific employees to dinner, the 45 per cent tax

would apply, the “Star” reports. The department is taking on 415 extra officers to administer the tax, 58 of them as inspectors. They have until April 1 to sort out the ground rules for the tax. The national accounting firm, Ernst and Whinney, told its clients that employers who bought their staff drinks outside the workplace would have to pay the fringe benefits tax. This has been disputed by other accountants. Ernst and Whinney said there were many anomalies.