Working from Home Allowance Update

In our last newsletter we discussed IRD’s then recently issued determination for tax free working from home costs related specifically to COVID-19. By way of reminder, this determination allowed employers to pay a tax free reimbursing allowance to employees for reasonable costs incurred, such as power, phone and office tools. The amount could either be calculated based on a reasonable estimate of actual costs or IRD have published a weekly amount of $15. This applied only for the 6 month period from 17th March 2020 to 17th September 2020 so long as the employee continued to work from home as a consequence of the COVID-19 pandemic.

The IRD are currently considering issuing a statement dealing with the tax implications of having employees working from home as a “new way of working”, rather than limited to the enforced way of working that occurs during a lockdown period of the COVID-19 pandemic.

In the meantime, IRD’s view is that both employers and employees can continue to apply the approach set out in the earlier determination until 17th March 2021. As such, an amendment to the determination has been issued to remove the requirement for working from home to be related to COVID-19 and also extending the timeframe to include up to 17th March 2021.

If you would like to know more about this reimbursing allowance, please contact your client manager or our payroll team.