New legislation has clarified the treatment of relocation payments as exempt income to employees and under what circumstances.
What has changed for relocation payments?
The government has exempted payments (not taxed) from being considered as income if it is made to an employee or on behalf of an employee AND if that payment is in connection to the relocation of an employee, for work purposes.
The amount can be no more than the actual costs incurred by the end of the tax year following relocation.
What is the definition of a ‘work related relocation’?
A
‘work related relocation’ means a relocation of the place where an employee lives that is required—
- a. because the employee’s workplace is not within reasonable daily travelling distance of their residence; and
- b. as a result of the employee—
- i. taking up new employment with a new employer; or
- ii. taking up new duties at a new location with their existing employer; or
- iii. continuing in their current position but at a new location.
What type of relocation expenses can the company claim for a relocation?
The government has directed the IRD to create a list of eligible work related expenses. These should eventually be found on the IRD website.
From www.ema.co.nz contact EMA advice line for further details.