Fringe benefit tax returns by one in eight

Press, 30 July 1985, Page 8

Fringe benefit tax returns by one in eight

By

MICHAEL HANNAH

in Wellington The Prime Minister, Mr Lange, has denied that the first fringe benefit tax returns imply a dramatic drop in Government revenue. The first batch of returns, comprising 91,500 of about 151,000 employers expected to. make returns, show that only one employer in eight believes he or she is liable to pay the fringe benefits tax. Another 60,000 returns are still expected from employers to complete the first tax take, covering the period to the end of June. An analysis of these returns was expected by August 1, said the director (compliance) for the Inland Revenue Department, Mr T. Bouzaid, yesterday. As yet, however, no estimate has been made of the amount of tax received by the Inland Revenue Department. Some Government officials believe that big companies, which were expected to bear the brunt of the tax for big car fleets or

subsidised mortgages and rentals, have still to make their returns. But Mr Bill Poole, an economist with the Employers’ Federation, yesterday cast doubt on this theory. He suggested that, instead, the outstanding 60,000 returns were probably due to be made by smaller companies. An analysis of which companies have made returns will be prepared by Inland Revenue next week, according to Mr Bouzaid. The Government has budgeted for ?200 million in returns for the 1985-86 years. Of the 91,500 returns received so far, only 11,500 paid tax. About 80,000 made nil returns, which meant they considered they were not liable to the tax. Mr Lange commented on the figures at his weekly post-Cabinet press conference yesterday. He said he assumed that big employers would provide the bulk of the revenue, and that the implications for revenue would not be as dramatic as the number of returns

would suggest. “We’ll see what happens when more of them file their returns,” he said. He also suggested that employers might have started to replace fringe benefits with monetary payment. “If employers have taken to compensating workers in money, which is the historical way of paying a worker, that will attract taxation and it will be good news,” he said. “We will probably be seeing some changes in remuneration structure as a result of the fringe benefits tax.” Mr Poole rejected the suggestion that employees were yet receiving money in place of fringe benefits. He said that some might eventually be paid this way, thus reducing the fringe benefit tax take, but increasing the P.A.Y.E. tax take. He also suggested that many employers had probably found ways of legally avoiding the fringe benefits tax, but would not divulge the methods of avoidance which could be used.