By Hayes Knight – 26 November 2012

Back in April 2012 we alerted you to a tax policy proposal which could have seen charities losing their existing tax benefit of not having to pay Fringe Benefit Tax.

After some good work from within the sector we are delighted to see the announcement from Revenue Minister Peter Dunne announcing Cabinet’s final decisions. These included that “…the current FBT treatment for charitable organisations will be retained. For example, the car park FBT changes will not apply to charitable organisations except where FBT currently applies, such as for employees of businesses run by charitable organisations.”

Part of the impetus for the original tax policy review was a reasonably aggressive salary packaging tax scheme marketed to large charities in NZ by an Australian company. The essence of this scheme was to provide employees with vouchers for food and other living costs and as a result aim to reduce their taxable income. Unsurprisingly this scheme has not found favour with the IRD and the Minister Dunne’s announcement included: “The new rules, however, would clarify that the charitable organisations’ FBT exemption will not generally apply to vouchers.”

Common sense prevails. As we said in our earlier article; if something looks too good to be true it generally is! click here to read previous article on fringe benefit tax.