New rules, effective from 1 April 2015, clarify the tax treatment of accommodation and meals you provide to employees. The rules also cover allowances paid to reimburse employees for accommodation and meal expenses. Some employers can backdate the new rules to 1 January 2011 for accommodation and 1 April 2011 for meals, if they meet certain conditions.
Key changes
Accommodation and accommodation payments are tax-exempt for employees:
- on out-of-town secoundments for up to two years
- on capital projects for up to three years
- who work at multiple workplaces on an ongoing basis
- who attend meetings, training courses or conferences as part of their job.
Some employees have longer tax-exempt time periods. Specify rules apply to:
- people working on Canterbury earthquake recovery projects
- New Zealand Defence Force personnel
- ministers of religion
- people working overseas.
Meals and meal allowances are tax exempt for employees:
- on work-related travel for up to three months
- who attend meetings, training courses or conferences as part of their job.
What you need to do
Employers must ensure they tax their employees accommodation or meals correctly. Receiving accommodation or meals can affect their employees' Working for Families Tax Credits entitlements, child support payments and student loan obligations. Please tell any of your employees who may be affected.
Find out more
Inland Revenue have an online decision tool available on their website from 1 April 2015 to help you work out whether the accommodation or meals you provide are taxable.
In the meantime, go to www.ird.govt.nz (search keywords: employee allowances.)
You can email them at accommodations@ird.govt.nz if you have any questions about backdating, requesting amendments or voluntary disclosures or relating to specific cases.
Sourced from Inland Revenue website