The Government is to include changes to the tax treatment of
employee allowances, reimbursements and employer-provided
accommodation in a bill to be introduced to Parliament later this
The intention is to provide clarity to employers and to minimise
compliance and administration costs.
Revenue Minister Todd McClay stated that currently, when an
employer meets an employee's work expense, and there is no private
benefit, then generally there will be no tax consequences. However
there are occasions when the line between what is a private expense
and what is solely a work expense is not straightforward.
The proposed changes include:
- When an employee is expected to work away from their normal
workplace for up to two years, employer-provided accommodation will
be tax-exempt. This exemption will extend to up to three years for
employees working on capital projects and up to five years for
Canterbury earthquake recovery projects.
- Accommodation or accommodation payments for those working at
more than one workplace on an on-going basis will be tax exempt
without an upper time limit.
- When an accommodation benefit is taxable, it will generally be
valued at its market rental value.
- Meal payments linked to work-related travel will be exempt for
up to three months. Meal payments and light refreshments outside of
work-related travel (such as conferences) will also be
- Payments for distinctive work clothing will be exempt (the
equivalent is where clothing is provided directly by the employer).
Plain clothes allowances will also be exempt if paid to employees
who are provided with a uniform but because of the nature of their
current duties are required not to wear that uniform.
We will keep you posted on further legislative changes affecting
employers. Upcoming changes include the new Health and Safety
at Work Bill and changes to the Employment Relations Act. If
you have any queries about how these may affect your business,
please contact Shima Grice - firstname.lastname@example.org