The tax man has fringe benefits in his sights - at least those provided as a trade-off for salary and now untaxed.
Charities are likely to be hardest hit by the proposals, outlined in an Inland Revenue issues paper, "Recognising salary trade-offs as income", issued this week.
It would affect not only remuneration but the calculation of family income for social assistance such as Working for Families tax credits and student allowances.
"People on equivalent salary packages should be taxed equally, irrespective of how they are paid," Revenue Minister Peter Dunne said.
"This does not happen when someone receives untaxed non-cash benefits in exchange for getting less cash in their pay packet."
The fringe benefits tax system now exempts benefits, such as car parks and child care, which are provided on an employer's premises, as well as benefits received by employees of charitable organisations.
It is proposed these benefits become taxable if they are provided as trade-off against salary.
One option is to treat them as taxable income in the employee's hands; the other is to remove the fringe benefit tax exemption so that they are taxable in the employer's hands.
The salary trade-off need not be explicit; it will be enough for the employee to have an "enforceable right" to the benefit.
KPMG tax partner Murray Sarelius said it was concerning that the proposals undermined exemptions created to reduce compliance costs.
Valuing the benefits could be problematic.
"If the employer isn't paying a separate lease for a specific car park, or is allocated a number of car parks combined with the floor lease, what is the cost? If you are going to focus on the value of the benefit to the employee, then is it the $4 an hour parking on the street outside the building, or the $12 a day parking at the car park down the road?"
The new rules would eliminate some existing boundary disputes, but introduce new ones, such as defining an "enforceable right".
"Say, as an employer I make a creche available and it is licensed for 20 kids. If I tell my employees 'If there's space available you can have it, if not, bad luck' then they probably haven't got an enforceable right to it, even if there is space available and they are able to avail themselves of the benefit."
It might make sense from a tax policy point of view but have unfortunate consequences from a broader public policy perspective.
"From a social policy perspective there may be a case for child care to be left alone," Sarelius said.
The proposals would also remove charities' near-total exemption from fringe benefit tax, and make the benefits liable for GST as well.
"The focus of the issues paper is horizontal equity. If you have two employees, one who works for a charity and the other who doesn't, why should they be treated differently?"
But the issues paper also recognises that the fringe benefit tax exemption is a form of Government subsidy to charities.
"This is going to substantially erode it," Sarelius said.
"In the current economic climate charities are quite constrained and this is going to be another blow to them."
Sarelius said employers needed to be thinking well before the April 1, 2014 start date of the changes about how they would affect them and how to communicate this to employees, "given that it is going to affect their back pockets".
Submissions on the proposed changes close on May 31. Legislation is expected this year and the new rules will apply from April 1, 2014.