Employees may lose their work smartphones, tablets and laptops if bosses are forced to pay tax on personal use of the devices under new Inland Revenue Department proposals.
The new tax suggested by the IRD has angered employers, who warn it will lead to "all sorts of fiddling" in a bid to dodge the extra cost.
The IRD wants to tax payments employers make for their workers' communication costs such as smartphone data and calling plans and home broadband services.
The tax would apply "when there is a mixed work and private expense that is more than incidental private use", the department said in a recent discussion document.
Employers and Manufacturers Association spokesman Gilbert Peterson said the association's members were angry about the proposal.
According to a recent survey of the association's members, 47 per cent of companies that provided employees with smartphones allowed personal use. Personal use of work laptops was permitted by 35 per cent of the 321 employers surveyed.
But Mr Peterson said the additional tax would cause some employers to think twice about allowing personal use of the devices.
"They'll say you can't take it home, it's just too much trouble."
Mr Peterson also said the suggested tax would be an administrative nightmare and "there will be all sorts of fiddling around with people trying to avoid it".
Also, it would be difficult to define personal use and keep records of it.
"When you use it to tell your wife or husband you're going to be home late from work because you've been caught in a business meeting is that a work issue or a personal issue?"
KPMG tax expert Murray Sarelius agreed the tax could discourage employers from providing their workers with smartphones, tablets and laptops.
"If you were going to pay $100 a month to get the employee online, you're increasing that to $150 because you're having to gross it up for the 33 per cent tax you'll have to pay on it. That's a reasonable hike in ... costs you might think twice about."
Many employers would absorb the extra cost but Mr Sarelius said there would be some who could not afford it.
Another fishhook for employers could be how the level of "incidental" personal use which would trigger the tax was set and enforced.
Submissions on the proposal for communications and other employee allowances are being considered by the IRD before draft legislation goes to Parliament.