JPCA logo
JPCA logo

Reimbursing employees working from home

May 9, 2023

Inland Revenue has released Determination EE004, which among other things determines that if you reimburse an employee who is working from home you may pay them only their extra costs. 

This would include, for example, reimbursement for the extra power they use. 

Oddly, you can’t pay for a share of the rent, rates or insurance, which allow your staff member to work from home for your benefit. The department argues the employee is going to incur the cost anyway, so it’s a private cost.

There is a perfectly legal solution if you want to contribute to the fixed costs. Your business can pay rent to an employee for the use of their home.             

This ought to be at market rate, which is not easy to work out. 

The internet might find you the average profit made on domestic rentals, which is probably as good a guide as you can get.

You will need to remind employees that your payments are no longer a reimbursement, but rent for part of their house. They are making a profit and so would need to show this in their personal tax returns.

This new rule started on 1 April.

Privacy Policy
© 2024 John Packham Chartered Accountants Limited
Chartered Accountants Howick Auckland Chapel Road Blue
4 Johns Lane, Pakuranga
Auckland, 2010
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram