Tax on accommodation allowances clarified
6 December 2012
Commissioner’s Statement clarifies tax treatment on accommodation allowances
Inland Revenue has issued a Commissioner’s Statement advising employers that they are required to account for PAYE on payments made towards staff accommodation costs.
A Commissioner’s Statement informs taxpayers of the Commissioner’s position and operational approach about a particular tax matter.
Group Tax Counsel, Graham Tubb, said that accommodation expenses may be treated as income and therefore liable for tax.
“These payments may be paid directly to a staff member or to a third party on their behalf. If the employer provides an accommodation allowance to staff on an on-going basis then this too may be deemed to be income.”
“Inland Revenue acknowledges that a number of people around the country spend time working away from their home and they continue to meet the costs of their home. However, accommodation payments by the employers in some circumstances can constitute an additional income stream that is subject to tax.
“It is important that the correct treatment is applied.”
Mr Tubb said that accommodation payments will not be taxable in regard to overnight or other short-term stays by an employee who is away from home due to work commitments.
“Taxpayers who may have adopted an incorrect tax position are encouraged to discuss the matter with their tax advisor, contact Inland Revenue, and consider making a voluntary disclosure.
“In many cases those making a voluntary disclosure will only be required to account for PAYE over the previous two years, and they will not be subject to use of money interest or shortfall penalties,” Mr Tubb said.
The Commissioner’s Statement is available on the Inland Revenue website at http://www.ird.govt.nz/technical-tax/commissioners-statements/cs-12-01-income-tax-treatment-accomm-payments.html.