Sugar babies are being urged to declare their luxury gifts as income.
A sugar daddy truck driver who lavishes between $500 to $1000 in gifts on his stripper sugar baby wants to claim it back as tax deductible expense.
The man, who does not want to be named, is angry at a chartered accountant's suggestion that gifts received by sugar babies from their sugar daddies must be declared as taxable income.
On top of lunch and dinner dates, the 52-year-old Auckland man says he has bought his sugar babies gifts that included perfumes, lingerie and jewellery.
"The intention when I give her these gifts are that they are presents. It is insulting to suggest that it is a form of payment because the sugar baby is not a prostitute," he said.
"If these gifts are taxed, then I should be able to claim what I spent on them back as tax deductible expense..not fair that the tax department gets it both ways."
Brooke West, 26, is a university student and stripper who has a number of relationships with sugar daddies. Photo / Dean Purcell.
However, tax expert and chartered accountant David Han has rubbished the man's suggestion.
"Claim expense against what?" Han said.
"Example, many real estate agents will want to claim expenses on their haircuts, but this is specifically disallowed by Inland Revenue as this is considered private in nature," Han said.
"The money received by the hairdresser, however, is taxable."
Another example, Han said, were private grocery bills - which are deemed as private consumption - even though supermarkets have to pay GST and income tax on the sale.
Han, who runs David Han & Associates, a boutique accounting firm in Newmarket, said claims could only be made only if there was a nexus between the expense and the business.
A report in the Herald on Sunday revealed that young New Zealand women were signing up to relationship arrangements with older men and exchanging love for gifts or money.
A sugar relationship is where an older man or woman spends large amounts of money on a younger girlfriend or boyfriend in exchange for a relationship - which may or may not be sexual.
Han said yesterday that sugar babies are no different to escorts and sex workers, and should be paying taxes on the gifts they get.
The IRD said whether or not a "transfer of value" - such as gifts, overseas holiday or cash - is a non-taxable gift or income depends on the type of relationship the two people have.
It is considered a gift, and not taxed, only if the transfer of value was made because of natural love and affection, the department said.
However, it is taxable if the gift is given in return for services or something received back.
A department spokeswoman said each case will need to be looked at individually to decide if it is a gift or income.
