Perks tax net widens

Press, 19 April 1989, Page 37

Perks tax net widens

By

PATTRICK SMELLIE

Low-interest loans, and disposal of property at excessive prices by companies to shareholders will be caught under new Fringe Benefit Tax applications announced in last week’s Income Tax Amendment Bill (No. 8). The bill introduces the concept of a non-cash dividend into the income tax system.

The Tax Education Office says non- t cash dividends paid by a resident New Zealand company to any shareholder will be subject to Fringe Benefit Tax from October 1 this year. At the same time, any such dividends paid after October 1 will be exempt from income tax where perks tax is payable. Examples of where such a non-cash dividend could arise include the sale of property by

a company to a shareholder for insufficient consideration. A further example is money advanced to a shareholder at an . interest rate below that prescribed for perks tax, now 15 per cent. A spokesman for the tax office said there was some concern that taxpayers might not yet have realised the impact of this aspect of the new legislation.