Date posted: 25/08/2020

‘A new way of working’ – ongoing tax implications of working from home

Inland Revenue have issued a variation to determination EE002 – payments to employees for working from home costs during the COVID-19 pandemic

In brief

  • Extended timeframe until 17 March 2021
  • IR considering a wider public statement on working from home implications
  • Variation removes need for WFH expenses to be tied to COVID-19

Inland Revenue have recently acknowledged that working from home expenses is a long-term issue not specific to COVID-19. While CA ANZ supported the temporary determination, released earlier this year, which helps employers contribute to out-of-pocket expenses of employees working from home, we have been calling for a more permanent solution and are pleased to see this determination extended until 17 March 2021. As before, the determination only applies where an employer chooses to make a payment to an employee.

A variation released last week not only extends the time for employers to treat reimbursing payments as deductible but also widens the scope of the determination, removing a compliance requirement for employers to prove the employee is working from home due to COVID-19. This statement also notes IR are considering further work on the implications of our ‘new way of working’.

“CA ANZ supports reviewing current settings to ensure they’re fit for our new way of working” says NZ Tax Leader, John Cuthbertson.

“The risk is that trying to address a topic as broad as working-from-home arrangements, will result in delays or losing a practical lens. We support a practical approach that is compliance-lite and provides certainty of tax treatment for employers”. 

The NZ Tax team welcomes thoughts or ideas from members on ensuring the tax implications of a new way of working are simple and cohesive. 

Read Inland Revenue’s variation

Variation to Determination EE002 - Payments to employees for working from home costs during the COVID-19 pandemic

Find out more

Read our thoughts on the initial WFH expenses determination

“Working from home will become the default setting for more and more Kiwis in the wake of COVID-19 and the tax system needs to recognise that workers are bearing extra costs.”

Read more