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Tax rules on employer-provided travel

Inland Revenue has issued an Operational Statement (OS 19/05) to clarify and simplify the tax rules around employer-provided travel to distant workplaces – for example, a person who works in Wellington but lives in Auckland, or who may travel greater distances in working from home or at multiple workplaces.

In putting out the Operational Statement, Inland Revenue said it was aware that many employers and employees were uncertain about when employer-provided travel to a distant workplace was subject to tax.

Some employers had also been treating all employer-provided travel to a distant workplace as not taxable.

So the Statement addresses that uncertainty by setting out Inland Revenue’s approach to determining whether employer-provided travel to a distant workplace is exempt or not.

The approach taken makes it easier to tell when this kind of employer-provided travel is exempt from income tax (PAYE) or fringe benefit tax (FBT).

Inland Revenue recognises that some taxpayers may need time to implement this new approach. Therefore, Inland Revenue does not expect taxpayers to apply the Statement to travel taken before 1 April 2020. 

However, taxpayers can choose to begin applying the approach outlined in this Statement from the date it was issued if they wish to.

The Operational Statement can be found on the Inland Revenue website