BusinessNZ is not convinced of the merits of IRD proposals for taxing employee allowances.

 The IRD proposals are aimed at making the rules easier to apply, but BusinessNZ Chief Executive Phil O’Reilly says the overall effect could be to make them more complex.

 “The proposals contradict the Government’s stated goals around improving public services and removing compliance costs.

 “Small businesses in particular could be faced with greater payroll and accounting costs.

“There would be increased difficulties in working out expenditure in areas like protective or specialist clothing, travel accommodation, or use of communications devices.

“An example is the proposal to tax any employee expenditure payment on smartphones and other communications devices, when there is mixed work and private use.

“Given the increased blurring of the lines between work and personal time, the rapid changes in technology and increased nuances between ‘use’ and ‘cost’ with bundled services, this would be a backward step.

 “The difficulty of determining what is work and personal time may be undermining the important principle that employees should not be taxed when there is no private benefit.

 “Blunt tax changes in this area could lead to employers restricting teleworking, or even restricting the use of communications devices because of tax compliance costs. Given the need for greater use of technology and innovation, this is the opposite of what should be happening.

“BusinessNZ believes the proposals should be withdrawn until formal feedback can be sought from taxpayers and interested parties.”