Designated parks in CBD to be taxed at same rate as employees' pay from 2014.

Central city carparks provided to workers will soon be taxed in a move described as "petty" by Opposition MPs.

Revenue Minister Peter Dunne announced yesterday that employee carparks would soon be recognised as income along with other non-cash benefits such as grocery and petrol vouchers.

The Labour Party said it was another "barrel-scraping" levy in line with the "paperboys tax" announced in the Budget, but Mr Dunne said it would simply make the tax system fairer.

Tax lawyers said that although the fringe benefit tax would be covered by employers, the cost was likely to be passed on to workers.


Mr Dunne said: "I'm expecting there won't be universal rejoicing at the decision but I think people will accept it's being pretty reasonable."

The tax would only apply to workers with a designated parking space and would focus on carparks in the Auckland and Wellington CBDs, where the value of a parking space was high.

Mr Dunne: "If it's a carpark that's got your name on it, or if there are 10 people in a building that has 10 carparks, it will apply. If there are 20 people in 10 carparks ... then no, it won't apply in that situation because it's not particular to that individual employee."

This meant MPs could be captured by the tax change, though Mr Dunne said not many had designated parks at Parliament.

It was not known how many people would be affected in total, but the change was expected to net $23 million to $25 million a year for the Government. The market value of a CBD carpark was believed to be around $3000 a year, and the new tax paid by companies would be equivalent to the income tax paid by the employee using the parking space. This meant if an employee earned $60,000 and had a free carpark in central Auckland, an employer would pay around $1000 in tax.

KPMG tax lawyer Murray Sarelius said this extra cost to companies was likely to be passed on to workers in the long-term.

He also said the compliance costs and complexity of the tax change were high in relation to the amount of revenue the Government gained. The Government had initially proposed taxing non-cash benefits that charities gave to their workers, but this plan was scrapped after it was criticised in public submissions.

Labour MP David Clark said the new tax was a desperate attempt to help the Government balance its books. "First the Government produced its petty paperboy tax, now it's putting a tax on carparks. What next? The Government is scraping the barrel to get enough money to meet their budget."


He said Labour's tax reform would include a capital gains tax and research and development tax credits.

The changes would be included in legislation to be introduced next month and were expected to be in force by April 2014.

Drive on in
Company carpark not taxed

From April 2014:
Company carpark taxed at same rate as the employees' income tax

Employee salary: $60,000
Income tax rate: 33 per cent
Central city carpark with market value of $3000 incurs tax of $990.