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National flags changes to Fringe Benefit Tax

John Key MP
National Party Finance Spokesman

04 April 2005

National flags changes to Fringe Benefit Tax

National Party Finance spokesman John Key has signalled an overhaul of the Fringe Benefit Tax, during a speech to the Auckland Rotary Club today.

“The next National Government will cut the red tape and compliance costs that are choking our businesses and preventing them from getting off first base,” he says.

“A practical example of what I am talking about is in the area of Fringe Benefit Tax.

“Today I want to announce that National will revamp Fringe Benefit Tax to remove a substantial amount of the paperwork that currently occupies too much administrative time for many of our businesses, especially the small ones.

“I anticipate it will have an impact on Crown revenue, reducing it by around $45 million annually, but National thinks it’s worth every cent.”

Mr Key says:

- Starting with motor vehicles, National will allow employers to value the vehicle by reference to either original cost or the tax written down value, while also giving employers the choice of valuing usage benefits from either actual use or vehicle availability. In addition we will simplify the definition of a work related vehicle.

- National will eliminate the need for complex record keeping and calculations caused by split-rate FBT. For the purposes of calculating FBT, a notional single marginal tax rate of 33 cents will be applied to all taxable benefits from which FBT can be calculated.

- In addition, we will raise the thresholds that apply to the other benefits category, which encompasses the likes of laptops, mobile phones, business tools and flowers etc. Currently the threshold is $75 per employee and $450 per employer. We will increase these to $200 and $2,000 respectively.

- We will investigate the possibility of integrating FBT into the PAYE regime.

- We won’t entertain suggestions of applying FBT to on-premises car parks.

“This is one practical example which shows how National will restore common sense and balance between government and the private sector,” Mr Key says.

Ends


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