Tax-free allowances for working from home have just become broader

Back in April as NZ went into its (first) lockdown, Inland Revenue announced that a $20 per week tax free allowance could be paid by employers to employees to cover working from home costs such as internet and electricity.

That announcement (Determination EE002) was a temporary response to the COVID-19 pandemic and covered the 6 month period from 17 March to 17 September 2020. It was only payable if the employee receiving the payment was working from home as a result of the COVID-19 pandemic.

These rules have just been amended to be a lot broader. First, the time period during which this tax free allowance can be paid has been extended by a further 6 months through to 17 March 2021. Second, the requirement that the working from home must be due to COVID-19 has been removed.

This means that regardless of the reason for working from home, the $20 per week tax-free allowance can be paid. This is good news and well worth taking advantage of.

Furthermore, the latest Determination (EE002A) hints at more tax announcements to come around working from home as Inland Revenue recognises this as a “new way of working”. It will pay to keep an eye on these developments over the next few months to make full use of any tax saving opportunities.


Brett Crombie

021 301 022

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