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UPDATED: Company gadgets…if it moves, TAX IT

04 Mar 13

It might just be time to bust out the old log book in the company car and start making entries for your smartphone.

That’s thanks to bad news looming on the tax front as the IRD eyes up what’s left of your fringe benefits. Applying the age old adage of ‘if it moves, tax it’, there are plans afoot to nab a few extra dollars by charging personal use tax on your mobile devices.

While our immediate response, and likely that of suckers taxpayers everywhere, was “You scaly bastards!”, we soon started wondering about the mechanics of such a thing. Of course, for tools vendors, this means another problem they can solve at a suitably hefty cost to employers.

Indeed, one of our sources immediately emailed us to say ‘BYOD solution providers will jump on this as another marketing point on controlling the use of devices.

They'll likely position that call numbers and application usage can be monitored, and anything deemed as personal use, can be 'charged' back to the employee, thereby removing any tax liabilities of the employer, as the employee is not gaining any personal use benefit. Of course what they elect to charge, and how, would be highly subjective, and manageable.’

Nice and easy, yes? No.

More likely is that you’ll be precluded from using your company phones, laptops and blenders outside of the office. Companies will work out how to say employees can't use these devices for personal use, but not monitor it, and ‘pseudo remove’ their tax liabilities.

The trouble is this – can the IRD dictate to a company that they have to monitor devices for personal usage? While it is certainly possible to do so, actually doing so has all kinds of practical limitations including cost implications.

The easier route is for employers to simply bypass the tax using any one of a number of quite obvious loopholes that will spring up around the mooted tax, including, for example, the next pay rise cycle: a small boost in remuneration can put paid to the need to monitor and tax any mobile device allowance.

We asked Dermot McCann, MD of Kaseya ANZ, what he thought about the proposed tax. "The proposed levy isn't necessarily a technology issue, but it does pose a policy question for how New Zealand businesses plan to oversee device management across an increasingly mobile and BYOD-enabled workforce. Many New Zealanders use multiple technology devices for a range of tasks and across many different locations and timeframes, whether they be full-time or contract staff," he says.

More specifically, continues McCann, such legislation could pose a challenge for IT and HR policy makers from an administrative, productivity and employee well being perspective. "BYOD is here to stay but it is work habits that will evolve. What we may see in response to any changes in tax law is a more focussed management of when, where and how employees undertake their work."

Our bottom line? This is something of a bureaucratic paper-shuffling exercise which hopefully gets nowhere near a tabled cabinet paper.

Especially since a backlash against the IRD and Government is likely, as it promotes New Zealand to be a Digital Economy while proposing 'initiatives' which make it even harder for small businesses to grow.