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

 

Health: Advanced Prostate Cancer Study To Improve Care For NZ Men

AUCKLAND: May 7, 2015: New Zealand men suffering from advanced or metastatic prostate cancer need new treatment guidelines to ensure improved, more consistent and more equitable care. Patients and their families could also benefit from better stage-specific ... More>>

BusinessDesk: Weak Dairy Prices Prompt Pull Back In Fonterra Forecasts

Weak global dairy prices have prompted analysts to pull back their expectations for Fonterra Cooperative Group's payout to farmers for next season. More>>

Broadband Network: Spark Launches New, Competitive Ultra Fibre Plan Line-Up

Spark is giving customers an even more compelling reason to switch to its Ultra Fibre plans from today with the introduction of new competitive pricing for the majority of its plans (details below) and Fibre Landline (voice-over-fibre technology) for ... More>>

Employment: ANZ Proposes Casualisation In Whangarei Stores

ANZ workers in Whangarei could see their incomes drop by 20 to 40 percent if the bank’s proposal to reduce the number of full-time positions goes ahead says FIRST Union national organiser Tali Williams. More>>

Finance: BNZ Develops Specialist Tāmaki Māori Banking Team

BNZ develops specialist Tāmaki Māori Banking Team to support Māori as Auckland grows More>>

Pharmaceuticals: Commerce Commission To Consider Pharmaceuticals Merger

The Commerce Commission has received an application from Pfizer Inc. seeking clearance to acquire all of the shares in Hospira Inc. More>>

Real Estate: Housing Unaffordability Issues Spread

Surging house prices in Auckland and Queenstown last month pushed home ownership even further beyond the reach of first home buyers in the two districts, according to the AMP360 Home Loan Affordability Report for March. More>>

Statistics NZ: Annual Exports To China Dip Below Australia

The value of goods exports to Australia ($8.7 billion) surpassed those to China for the year ended March 2015, Statistics New Zealand said today. More>>

Science: Hookworm Discovery At Malaghan Institute

Professor Graham Le Gros has led a team which has stimulated both innate and memory responses to the parasite, discovering along the way the unexpected behaviour of one particular immune cell, in Hookworm, one of the world’s most devastating tropical ... More>>

Business: Provinces Urged To Make Full Use Of New Air Services

Provincial New Zealand has been urged to use new air services to Auckland or risk losing them either partially or completely. The stark warning was issued today by Far North mayor John Carter at a ceremony at Kaitaia airport to mark the final Air ... More>>

Mobile: 2degrees To Credit All Calls And SMS To Nepal

In the wake of the devastating earthquake in Nepal in the weekend, 2degrees will be crediting all calls and SMS messages made to mobiles and landlines in Nepal from Friday 24th April until midnight Wednesday 29th April. More>>

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news