20 Nov 2012

Compliance cost an issue on tax changes

6:07 am on 20 November 2012

A tax expert says suggested changes to the way some employee allowances are charged for tax could cause more work and costs for businesses.

Last week, the Government released a discussion paper which suggested a number of changes to the tax treatment of particular employee allowances which cover expenses such as meals, accommodation, clothing and cellphones.

At present, payments that meet an employee's private expenses are treated as being part of the person's taxable income.

But the Inland Revenue Department says the divide between work and private expenses is not always clear.

It says the paper suggests some clear boundaries to give more clarity to businesses.

But a tax partner at PricewaterhouseCoopers, Elly Ward, says this is not the case with some of the suggestions and the current legislation is very unclear.

Submissions on the proposed tax changes close in February 2013.