Accounting for allowances and benefits for staff
Holiday pay, bonuses, allowances, and special benefits paid to employees such as loss of earnings compensation or life insurance premiums are usually liable for tax.
Holiday pay
Holiday pay and pay for statutory holidays are taxed in the period you actually pay them. You can use the online calculator or the PAYE deduction tables to work it out.
Bonuses
Bonuses paid to staff are taxable. How this is done depends on the type of bonus.
Allowances
Some allowances are taxable and others are tax free. Our mileage rate can be used to reimburse travel expenses. GST credits can be claimed for reimbursement allowances.
Special benefits
Special employment benefits such as prize money; loss of earnings compensation; life and personal accident insurances; and honoraria may be subject to PAYE or withholding tax.
Job Support Scheme Allowance
The Government has introduced a Job Support Scheme (formerly referred to as the 9 day fortnight) which is aimed at helping businesses keep workers. The scheme provides an allowance administered by Work and Income to supplement the income of workers who have accepted reduced hours to keep their jobs in the current economic climate.
Date published: 16 Sep 2004
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