New Tax On PNG Housing Benefit Only Applies To High Income Earners

Government hopes to raise $1.84 million from taxing 'high-cost' and 'up-market' housing provided to workers

By Rosalyn Albaniel and Gorethy Kenneth

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Feb. 8, 2017) – Only very high income earners will be targeted by the wage tax on housing benefits, the Internal Revenue Commission says.

These are workers who are living in employer-owned accommodation categorised as "high-cost" and "up-market" housing, the latest addition in the much-discussed housing tax.

The Government hopes to raise K6 million [US$1.85 million] in new tax revenue from these two new levels.

The IRC revelation comes after several companies started deducting housing tax across the board from its employees in Port Moresby and Lae.

According to IRC, high-cost housing in relation to employer-owned accommodation is any unit which would fetch between K800,000 [US$247,000] and K1.5 million [US$462,000] if sold on the open market – or whose market rental is between K3000 and K5000 a week.

Up-market housing is any unit of accommodation which would fetch K3 million [US$925,000] or more if sold on the open market or whose market rental is between K5000 [US$1,540] and K7000 [US$2,157] a week.

IRC Commissioner General Betty Palaso said yesterday there had been a lot of anxiety among employees in employer-provided accommodation, because there had not been any proper communication between the tax office and the media to ensure the correct details were printed.

IRC senior executive Steve Burke said the tax measure was not applicable to any worker accorded accommodation costing less than K3000 [US$924] a week.

"The only changes are the upmarket and very high cost which targets high-flying employees, people on large salaries. The vast majority of employees are not affected," he said.

Mr Burke said the K6 million that Government is hoping to raise from this tax measure would be from those two categories.

He said the new schedule had already been approved by the National Executive Council and was due to be effected on January 1, 2017, as announced by the Government. However due to some issues the schedule was circulated in the second week of January.

"Because the regulation was not issued to tax professionals to allow them to comply with the first pay in January, it is of no fault of the employer or employee that they did not comply. So long as they comply and correct in the second or third pay, then we will not penalise," Mr Bourke said.

PNG Post-Courier
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