Allowances
Some allowances are taxable and others are tax free. Our mileage rate can be used to reimburse travel expenses. GST credits can be claimed for reimbursement allowances.
Accommodation allowances
An employer might choose to provide accommodation or pay an accommodation allowance when an employee needs to continuously work at a distant work location that isn't within reasonable daily travelling distance of their home. Provided certain criteria is met, these can be tax exempt.
Meal and clothing allowances (specific rules and tax exemptions)
Payments made to cover meal or clothing allowances may be exempt from tax provided certain conditions are met.
Benefit allowances (accommodation, meals or clothing)
Benefit allowances are payments made to employees in addition to salary or wages, such as accommodation, meal or clothing allowances. Benefit allowances also include accommodation, meals or clothing allowances when provided to the employee.
Backdating of tax exemption for accommodation and meal allowances
You can apply the accommodation and meal allowance rules to periods before 1 April 2015 in certain circumstances.
Mileage rate for self-employed people and reimbursing employees
If you're self-employed you can use our mileage rate to calculate the cost of using your motor vehicle for business purposes. If you're an employer you can calculate an employee's reimbursement when they use their private vehicle for work purposes. Employers may also use rates published by a reputable independent New Zealand source to reimburse their staff.
Reimbursing relocation expenses
Payments that reimburse expenses for work-related employee relocations can be exempt income of the employee provided certain conditions are met.
Volunteer expenses
Volunteers often have expenses associated with their voluntary activities either from the activity itself or travel to or from where the activity took place. Reimbursement payments based on actual expenditure or a reasonable estimate are exempt income.
Travelling allowances
A travelling allowance is paid to an employee for travel between home and work and can be tax-free providing certain conditions are met.
Reimbursing allowances
Reimbursing allowances are paid to employees to cover on-the-job expenses such as meals, mileage or tools. In most cases they are not taxable.
GST on allowances
If you are registered for GST, you can claim GST credits on reimbursements paid to employees for business expenses. You cannot claim GST credits on other allowances paid to employees.