Employees who work from home could soon be permanently aided by tax rule changes to cover their expenses.
Inland Revenue (IRD) first introduced tax relief on allowances paid to employees who work from home during New Zealand's initial COVID-related lockdowns. The current determination for such tax relief is due to expire on March 31.
But the latest determination, dubbed EE004, provides no end date - and IRD is also proposing raising the threshold for how much a worker can be reimbursed tax-free.
Under EE04, workers will be able to get a tax-free allowance of $27 per week, up from $20, to cover working-from-home costs including internet and power.
Employers can reimburse their workers more than $27 if they wish, but any amount above that threshold will be considered taxable income to the employee, an IRD spokesperson told Newshub.
"For a reimbursement to be recognised as exempt income, the payment must be made to reimburse the employee for additional costs that the employee has incurred," IRD said.
"This means that to the extent that any reimbursement includes an allowance for the employee's non-variable personal expenditure (such as rent, rates and mortgage interest), that part of the reimbursement could not be recognised as an exempt payment in the hands of an employee."
EE004 said IRD will "continue to monitor the amount of variable expenditure typically incurred by employees and will periodically update the amounts in this determination as appropriate".
The determination wouldn't be binding to employers or employees, it said.
Public consultation for the determination ends on Friday. IRD said it hopes to consider feedback and publish its final decision by the end of next week.
