INDEPENDENT NEWS

KPMG Critical Of Inland Revenue Position On Accommodation

Published: Thu 6 Dec 2012 02:58 PM
Media Release
6th December 2012
KPMG Critical Of Inland Revenue Position On Accommodation
Inland Revenue released today a Commissioner’s Statement signalling a significant and unwelcome change in approach to accommodation and accommodation allowances. This includes situations where employees have accommodation provided by their employers while temporarily relocated or are travelling for work.
Contrary to long-standing practice, the Statement suggests that the value of accommodation is taxable even if an individual is maintaining a home elsewhere and does not benefit from the arrangement.
While the Statement acknowledges that “overnight or other short term stays” should not be taxable, it implies that anything more than a few days would be – and always should have been.
Murray Sarelius, tax partner at KPMG said “The Inland Revenue’s position is contrary to common practice, including its own previous statements, and seems to be trying to rewrite history.”
“This seems to be a situation where Inland Revenue is dealing with a few extreme cases on audit, and is stretching to justify its position in a way that applies much too broadly. The result penalises the majority of situations where there should not be an issue.” said Sarelius.
“The most obvious group of people impacted by this interpretation will be employees temporarily located in Christchurch to assist with the rebuild. Inland Revenue is suggesting they should be taxed on their accommodation, regardless of the fact that they and their families live elsewhere.”
The interpretation will not only impact on employers, but on individuals. An employee could see their student loan repayments increase, or Working for Families entitlements reduce, as a consequence of needing to travel for work.
“Inland Revenue seems to have missed the modern reality of workforce mobility. Businesses needs to deploy talent and skills where required – whether to enhance productivity generally or to meet specific challenges, such as the Christchurch rebuild.” said Sarelius.
ENDS

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