Taxman eases home-office expense rules

Inland Revenue is making it easier for employers to reimburse the expenses of employees who are having to work from home because of the coronavirus pandemic.

A new determination from the tax department means employers can pay employees up to $20 a week tax-free for expenses such as additional heating, without having to estimate or show what the employee’s actual expenses were.

Employers can also now make a taxfree payment of up to $400 per employee for furniture costs, again without having to gather evidence on how the money had been spent.

The rules are a ‘‘temporary response’’ to the Covid-19 pandemic and would only apply to payments for expenses incurred between March 17 and September 17, Inland Revenue said.

Employers have previously only been allowed to make a tax-free payment of $5 a week to employees for phone expenses before needing evidence that expenses had been incurred as a result of working from home.

Inland Revenue said its ruling was not intended to suggest employers should feel obliged to make such payments to staff who were working from home.

‘‘It is ... acknowledged that many employers will not be in a financial position to make additional payments to employees during the Covid-19 pandemic,’’ Inland Revenue tax counsel leader Susan Price said in the determination.

Chartered Accountants Australia and New Zealand welcomed the ruling, which it said would help employers contribute towards the out-of-pocket expenses of employees working from home.

But its New Zealand tax leader, John Cuthbertson, said it was only a temporary solution ‘‘to what is a long-term issue that the country needs to address’’.

‘‘Working from home will become the default setting for more and more Kiwis in the wake of Covid-19 and the tax system needs to recognise that workers are bearing extra costs,’’ he said.