Tax bill removes FBT on public transport

Public transport will be exempt from fringe benefit tax under proposals in an annual tax Bill introduced today.

Revenue Minister David Parker said the exemption contained in the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill will apply when fares are subsidised by an employer and the fares are mainly for their employees to travel between home and their place of work.

It does not include taxis and airfares.

“As Environment Minister as well as Revenue Minister, it is pleasing to put forward a taxation proposal that supports business as well as the environment,” David Parker said. 

“Many employers already subsidise the commuting costs of their staff, for instance by commuting to work by car and employer-provided car parks.

“We can help to achieve a more neutral FBT outcome by including the option of the more environmentally-friendly mode of public transport. This was a recommendation of the Tax Working Group.”

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

The Bill also contains a range of other proposals intended to improve aspects of the tax system.

It introduces a requirement for digital platforms to collect GST on ridesharing, food and beverage delivery, and short-stay and visitor accommodation provided in New Zealand and return it to the IRD.

“There is a question of fairness here, as the traditional suppliers of services do charge GST on their services, while people earning revenue in the platform economy may not. This can give them an advantage over traditional suppliers,” David Parker said.

The Bill also includes measures to implement an information reporting and exchange framework developed by the Organisation for Economic Co-operation and Development for participants in the platform economy.

The Bill also addresses an issue of concern for New Zealand businesses operating across the border – clarifying and modernising how the various employer taxation requirements, such as PAYE, FBT and employer’s superannuation contribution tax, apply in a cross-border situation.