Public transport will be exempt from FBT in tax bill introduced

Public transport will be exempt from benefits tax under proposals in an annual tax bill tabled today.

Revenue Minister David Parker said the exemption contained in the Taxation Bill (Annual Rates for 2022-2023, Platform Economy and Remedial Matters) will apply where rates are subsidized by a employer and that the fares are primarily intended for their employees to travel between their home and place of work.

It does not include taxis and plane tickets.

“As Minister of the Environment and Minister of Revenue, I am pleased to present a tax proposal that supports businesses as well as the environment,” said David Parker.

“Many employers already subsidize the travel costs of their staff, for example by driving to work and using parking lots provided by the employer.

“We can help achieve a more neutral FBT outcome by including the option of the more environmentally friendly mode of public transport. This was a recommendation from the tax working group.”

The proposal is also business-friendly, as it removes a compliance cost.

The bill also contains a series of other proposals aimed at improving certain aspects of the tax system.

It introduces an obligation for digital platforms to collect GST on carpooling, food and drink delivery, and short-term and visitor accommodation provided in New Zealand and return it to the IRD.

“There is a fairness issue here, as traditional service providers charge GST on their services, unlike people earning income in the platform economy. This may give them an edge over traditional providers,” said David Parker.

The bill also includes measures to implement a communication and information exchange framework developed by the Organization for Economic Co-operation and Development for participants in the platform economy.

The Bill also addresses an area of ​​concern for New Zealand businesses operating across the border – by clarifying and modernizing how the various tax requirements for employers, such as PAYE, FBT and tax on employer pension contributions, apply in a cross-border situation.

(With contributions from the New Zealand government press release)

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