Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Relocated Christchurch workers face unwelcome new tax rules

Relocated Christchurch workers face unwelcome new tax rules

By Pattrick Smellie

Dec. 6 (BusinessDesk) - Workers who have relocated to Christchurch at their employers' expense risk having their accommodation costs treated as income under a new tax department ruling described by one major accounting firm as "a significant and unwelcome change in approach".

The Inland Revenue Department issued a special "Commissioner's Statement" on the issue today, saying employers will be required to count accommodation costs as income when paid on behalf of staff if they are spending any more than a few nights away from home.

“Inland Revenue acknowledges that a number of people around the country spend time working away from their home and they continue to meet the costs of their home," said IRD group counsel Graham Tubb. "However, accommodation payments by the employers in some circumstances can constitute an additional income stream that is subject to tax.

“It is important that the correct treatment is applied.”

However, KPMG tax partner Murray Sarelius accused the tax department of rewriting the rules in order to deal with what appeared to be "a few extreme cases on audit."

The new position was contrary to common practice and "is stretching to justify its position in a way that applies much too broadly. The result penalises the majority of situations where there should not be an issue.”

The ruling was likely to have an impact on both employers and employees who had been relocated temporarily to help with the Christchurch earthquake rebuild.

"Inland Revenue is suggesting they should be taxed on their accommodation, regardless of the fact that they and their families live elsewhere,” Sarelius said, warning it could increase student loan repayment requirements or reduce Working Families entitlements because accommodation paid by the employer would be counted as increasing the employee's total income.

“Inland Revenue seems to have missed the modern reality of workforce mobility. Businesses needs to deploy talent and skills where required – whether to enhance productivity generally or to meet specific challenges, such as the Christchurch rebuild.” said Sarelius.

While the IRD statement says overnight or short term accommodation costs would not be taxable, if the employer provides an accommodation allowance to staff "on an on-going basis", then those payments could be deemed to be income since the employee was effectively being provided with a second home.
"Accommodation costs are usually considered private in nature, as everyone needs shelter of some form. Often accommodation is about the employee getting themselves into a position to work," the IRD's full note says.

It claims also that while the ruling may appear to be new, such accommodation payments should have been treated as income and attracted PAYE tax payments for some years. Taxpayers who thought they had treated such payments incorrectly are being urged to make voluntary declarations.

“In many cases those making a voluntary disclosure will only be required to account for PAYE over the previous two years, and they will not be subject to use of money interest or shortfall penalties,” said Tubb.

The arrangements apply both to accommodation payments made on an employee's behalf and where the employee makes "payments on account" directly to an accommodation provider.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

ALSO:

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news