A thinly veiled threat to begin taxing billions of dollars worth of assets has been issued.
Baches, planes, yachts and salary sacrifices like complimentary laptops, carparks, cars, medical insurance and company credit cards might be in the gun if the Government goes ahead with plans issued in only a sketchy form yesterday.
"The Government is reviewing the tax treatment of employee benefits paid in lieu of salary. Any changes are expected to result in an increase in tax revenues," the Budget said.
New Zealand's top work perks have been picked as company cars, health insurance, computers, phones, gym membership, sabbaticals and childcare.
Food, clothing, medical consultations and services such as physiotherapy, conference attendance and travel have also been listed as perks not uncommon in New Zealand workplaces.
The existing system already captures many perks under fringe benefit tax but it appears the net would be widened.
Revenue Minister Peter Dunne indicated a widening of the net, saying the definition of income might be changed, particularly when it came to tax credits which could be claimed under the Working for Families scheme.
Whether non-taxed, non-cash benefits should be subject to tax was the nub of the issue, Dunne said.
The Budget gave no detail on what would be affected or how, but promised more detail shortly.
"A Government discussion document will be released on the apportionment rules applying to tax deductions for high-value assets that are also partly used for private purposes. Any changes to those rules could have a positive impact on tax revenue," Budget papers said.
Dunne cited rich people's leisure assets as being of the greatest interest.
"There have been instances where high-value assets such as yachts and holiday homes, which are both rented out and used privately, have provided owners with inflated tax deductions, which either result in less taxable rental income or tax losses that can be used to offset other income.
"Everyone would like to own a holiday home but it should not be subsidised by the taxpayer. We want to make sure the rules are fairer and do not distort investment decisions," Dunne said.
Thomas Pippos, Deloitte's managing tax partner, said tax deductions can be claimed on assets such as planes, boats and holiday homes if they are used for business purposes but said that could change.
"The current rules that apportion certain activities as between their private and business components could be the subject of a major rethink," he said.
He criticised the Budget for providing scant detail on plans and nothing in terms of details or the substance of any reforms planned. He is predicting the Government will issue an "interesting" consultative document on this soon.