April 24, 2017
Benefit allowances also include accommodation, meals or clothing allowances when provided to the employee.
The taxable value of the benefit (the difference between market value and the amount paid by the employee) is added to the employee’s wages each pay period and PAYE is deducted from the total.
There are specific rules to determine the taxable value of employer-provided or paid accommodation.
The tax treatment of employer-provided accommodation or accommodation payments may be exempt from tax provided certain conditions are met.
There is a transitional rule for employer-provided or paid accommodation for employees working on Canterbury earthquake reconstruction projects over the period 4 September 2010 to 31 March 2019.
Payments made to cover meal or clothing allowances may be exempt from tax provided certain conditions are met.
The rules around accommodation and meal allowances can be applied retrospectively subject to certain conditions and changes to the definition of the term “expenditure on account of an employee”.