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

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news