Allowances in Kind - Whether Assessable Income

Abstract:     
In Sixton v Commissioner of Inland Revenue (1982) 5 NZTC 61,285 the objector’s employer awarded him a “points cheque” that could be exchanged for goods or overseas travel but that could not be exchanged for cash. The Commissioner included the value of goods bought with the “points cheque” in the taxpayer’s assessment, arguing it was an “allowance” under section 65(2)(b) of the Income Tax Act 1976. The court upheld Sixton’s objection, holding that neither the “points cheque” nor goods purchased with it were “allowances” but declined to state exactly what the meaning of “allowance” is. This and similar cases led Parliament to add fringe benefits tax to legislation that in due course became the Income Tax Act 2007.

Number of Pages in PDF File: 1

Keywords: Income Tax Act 1976, Allowances, Assessability

JEL Classification: K34

Accepted Paper Series