4 Oct 2012

Government plans to tax employee car parks

10:22 pm on 4 October 2012

There are fears a new proposed tax on car parks will not be applied evenly across the country or within cities.

The Government is going ahead with a plan to tax car parks that are part of a person's salary package.

Under new legislation, Inland Revenue would initially target car parks in the Auckland and Wellington central business districts.

While car parks used by work vehicles, shift workers and disabled people will be excluded, some tax experts and businesses are criticising the move as unfair and inequitable.

Tax expert Craig McAlister says the changes will create a ridiculous situation because some employers will be subject to the tax while others won't, depending on where their car parks are located in a city.

Frank Owen, from the Institute of Chartered Accountants and an adviser on the new tax, says it is an attempt to improve the integrity of the fringe benefit system and would remove some discrepancies. However, he does not support some aspects of the proposal.

"What the Government is saying is if you're in Auckland and Wellington the benefit you get from a car park is more substantial and, therefore, you should pay tax.

"Whereas someone who has got a car park provided which is not of great value shouldn't be taxed and you could argue that there's a bit of an anomaly in that approach."

Eugene Ng from recruitment company H2R consulting fears the new tax may prevent some people from doing their jobs properly and some businesses would be forced to absorb additional costs.

"I think it's going to cause some issues in terms of people actually being able to carry out their jobs normally due to the way that the ruling is set out and it will add additional cost to a business if they have to provide a car park for a person that needs to use their car for work."

The bill is scheduled will be presented to Parliament in November.