IRD firm on licensed car parks tax

By Brian Fallow

WELLINGTON - Inland Revenue remains unmoved in its view that firms have to pay fringe benefit tax on car parks they license rather than lease or own.

KPMG tax partner Craig Elliffe said it was now very important for firms to review their car parking arrangements to see whether they can be varied to come within the recognised exemption (by having a lease).

The tax laws exempt from the definition of a fringe benefit something provided "on the premises" of the employer.

But if a firm arranges and pays the proprietor of a public car park to make parks available for its employees, the IRD now regards that as a taxable perk.

Objectors like Mr Elliffe have argued that would be unfair, impose compliance costs on business and be contrary to Parliament's intention.

But the IRD, in a binding ruling this month, said Parliament could have provided a specific exemption for car parks but had not done so, opting instead for an exemption for all benefits provided on employers' premises.