is travel allowance taxable nz

• Starting employment
• Who is an employee
• Types of employee
• Contractor versus employee
• Preparing for the hiring process
• Describing the job
• Advertising the job
• Job applications
• Interview tips for applicants
• Selecting and appointing
• Psychometric testing and assessment centres
• Discrimination when hiring
• Transgender employees
• Hiring young people
• Why employ young people
• Find and hire young staff
• Support and train young staff
• Help and resources for young people
• Barriers to youth employment
• Hiring migrants
• Sample appointment letters
• Employment agreements
• Types of employment agreements
• Things an employment agreement must contain
• Offering and negotiating employment agreements
• Employment agreement builder
• Unfair bargaining
• Trial and probationary periods
• Trial periods
• Probationary periods
• Unions and bargaining
• Collective agreements
• Collective bargaining
• Initiation of collective bargaining
• Preparing for bargaining
• Preparing your team
• Negotiating the agreement
• After the negotiations
• Code of good faith in collective bargaining
• Passing on collective agreement terms
• Unable to agree
• Strikes and lockouts
• Work stoppages
• Employment Relations Education leave
• Calculating, allocating and taking leave
• Approved courses
• Applying for employment relations education course approval
• Criteria to assess course approval
• Critical success factors
• Using pre-approved courses
• Applying to have a course re-approved
• Workplace relationships in the screen industry
• Status of occupational bargaining
• What work is covered by the Screen Industry Workers Act
• Contracts between engagers and workers
• Collective bargaining in the screen industry
• Bargaining for occupational contracts
• Bargaining for enterprise contracts
• Resolving disputes in the screen industry
• Workplace access in the screen industry
• Rights and responsibilities
• Minimum rights of employees
• Minimum rights in other languages
• Employment responsibilities
• Working more than one job
• Protecting employees who work alone
• Young employees
• Right to work in New Zealand

Hours and wages

• Pay and wages
• Types of pay
• Minimum wage
• Current rates
• Previous rates
• Disability exemptions
• Agricultural industry
• Foreign fishing crews
• How much to pay
• Benefits and allowances
• Pay and employment equity
• Pay equity process
• Pay equity information in the repository
• Gender pay gap
• Pay review process
• Pay review analysis
• Evaluation of equitable jobs
• Spotlight skills recognition tool
• Employee pay check
• Resources for payroll professionals
• Rests and breaks
• Rest and meal breaks
• Breastfeeding at work
• Hours of work
• Keeping accurate records
• Leave and holidays
• Alternative holidays
• Minimum leave and holidays entitlements
• Public holidays
• Public holidays and anniversary dates
• Previous years
• Public holidays falling on a weekend
• Public holiday falls on Saturday
• Public holiday falls on Sunday
• Falls within leave period
• Employees working shifts or on call
• Transferring by agreement
• Restricted shop trading days
• Restricted shop trading tool
• Local council Easter Sunday shop trading policies
• Annual holidays
• Entitlements
• Pay-as-you-go
• Cashing-up annual holidays
• Annual closedowns
• Taking annual holidays
• Sick leave entitlements
• Requirement for medical examination
• Sick leave and ACC payments
• Otherwise working day
• Bereavement leave
• Parental leave
• Eligibility
• Types of parental leave
• Keeping in touch days
• Protecting your job
• How to take parental leave
• Leave forms and letters
• Leave scenarios
• Employer's response
• Parental leave payment
• Who can get parental leave payments
• Payment amount
• Payment period
• Applying for payments
• Preterm baby parental leave payments
• Payment scenarios
• Returning to work
• Ending leave scenarios
• Parental leave problems
• Family violence leave
• Short-term flexible working
• Proof of family violence
• Problems getting family violence rights
• Workplace policies and penalties
• Other types of leave
• Stress leave
• Garden leave
• Defence force volunteers
• Leave without pay
• General election voting leave
• Employment during and after disasters
• Long service leave
• Jury service
• Calculating payments for holidays and leave
• Annual holiday payment rates
• Paying via payroll system
• Pay for leave and holidays guidance
• Public, sick, bereavement, alternative pay
• Leave and holidays in final pay
• Relevant and average daily pay
• Changes to tax legislation for employee share schemes
• Holiday and leave entitlement and payment ‘must-knows’
• Gross earnings to calculate payment
• Workplace policies
• What are workplace policies?
• Employee performance
• Growing performance
• Setting expectations
• Good communication
• Performance reviews
• Giving and getting feedback
• Positive conversations and reaching agreement
• Managing performance issues
• Why manage performance issues
• Possible causes
• Questions managers should ask themselves
• How to manage performance issues
• Informal intervention
• Formal intervention
• When performance improves
• On-the-job training
• Training, development and coaching
• Education and training for trades
• Health and safety at work
• Ethical and sustainable work practices
• What are ethical and sustainable work practices
• Demand for ethical and sustainable work practices
• End-to-end assurance systems and processes
• Employer's approach to assuring ethical and sustainable work practices
• Identify and minimise labour rights issues
• Franchisor's approach to assuring ethical and sustainable work practices
• Managing risks
• Work practice policy or code of conduct
• Recruiters and employment brokers approach to assuring ethical and sustainable work practices
• Employment due diligence questions
• Productive workplaces
• Work-life balance
• Flexible work
• Benefits, rights and responsibilities
• Things to consider when working remotely
• How to apply
• Considering a request
• Responding to a request checklist
• Approving a request
• Declining a request
• Unresolved requests
• High Performance Work Initiative (HPWI)
• Employee privacy
• Protected disclosures
• Workplace change
• Overview of workplace change
• Workplace change process outline
• Assessing the impact of structure change on jobs
• Selection process
• Restructuring when a business is sold or transferred
• Insolvency and employment
• Restraint of trade
• Work equipment and clothing
• Tools of trade
• Uniforms and dress codes
• Tests and checks
• Criminal record checks
• Drugs, alcohol and work
• Credit checks
• Employment for disabled people
• Disability definitions and etiquette
• The benefits of being a disability confident organisation
• Plan to become a disability confident organisation
• Reasonable accommodation (measures)
• Communications support
• Hiring disabled people
• Keeping disabled employees
• Financial help and wages
• Disability information and resources for employers
• Resources and government support for disabled employees and jobseekers
• COVID-19 and the workplace
• Leave and pay entitlements during COVID-19
• Vaccines and the workplace
• Frequently asked questions
• Addressing health and safety concerns
• Modifying employment agreements
• COVID-19: Guidance for payroll professionals
• Temporary changes to parental leave law
• Resolving problems
• Employer and employee must do’s
• Not misleading or deceptive
• Be responsive and communicative
• Decisions which might cause job loss
• Good reason
• Fair process
• Types of problems
• Misconduct and serious misconduct
• Employee actions outside of work
• Bullying, harassment and discrimination
• General process
• Steps for the person who feels bullied
• Steps for employers
• Further steps
• Sexual harassment
• What is sexual harassment
• Steps for workers to address sexual harassment
• Steps for workers accused of sexual harassment
• Steps for employers to address sexual harassment
• Racial harassment
• Discrimination
• Transgender people discrimination
• Exceptions to unlawful discrimination
• Incompatibility
• Medical incapacity
• Migrant exploitation
• Chinese Simplified
• Chinese Traditional
• Steps to resolve
• Informal actions
• Talking to your employer
• Disciplinary action
• Disciplinary process
• Investigations
• Early Resolution
• Personal grievances
• What is a personal grievance?
• The personal grievance process
• Unjustifiable dismissal
• Unjustified disadvantage
• What is mediation
• How to request mediation
• Online mediation meeting
• Preparing for mediation
• Reaching an outcome in mediation
• Representation at mediation
• Role of a representative
• Mediation in collective bargaining
• Records of settlement
• How to submit a record of settlement
• Labour Inspectorate
• Labour Inspectors
• Labour Standards Officers
• Addressing Holidays Act non-compliance
• Employers who breached employment standards
• Courier drivers’ employment status
• Follow the agreed process
• Preventing relationship problems
• Stop issues before they start
• Recognise an issue early
• Escalating unresolved issues
• Employment Relations Authority
• Employment Court
• Human Rights Review Tribunal
• Ending employment
• Resignation
• Abandonment of employment
• Constructive dismissal
• Giving notice
• During the notice period
• On and after last day of employment

An employee is not entitled to be paid allowances over and above salary and wages unless these have been agreed with their employer.

• Pay and gender

Allowances over and above salary or wages

There is no specific legal entitlement to allowances. Allowances are extra payments paid to an employee to cover employment-related expenses.

The payment of and level of allowances, over and above salary or wages, can be agreed to by the employer and employee. Generally, allowance payments are used to recognise:

• extra qualities or skills an employee brings to a job
• special responsibilities an employee may have taken on (for example, leading hand or supervisor)
• any unpleasant or inconvenient features of their work.

Employees may be paid allowances to cover costs or expenses they have paid on behalf of their employer.

If an employee incurs a cost on their employer's behalf it is good practice for the employer to reimburse or compensate them. If allowances are a regular feature of a job, it’s a good idea to have them clearly specified, either in an agreement or in a workplace policy, so that it’s clear for everyone about when and how they apply. 

An employer should also check with Inland Revenue on the payment of allowances, and which ones are taxable and non-taxable. 

Allowances – Inland Revenue (external link)

Tools and Resources

Subscribe to our email newsletter.

Receive news and updates each month from Employment New Zealand.

Other links you might find useful

How helpful was this information.

You must enable JavaScript to submit this form

Still haven't found what you're looking for?

Please note that this content will change over time and may be out of date.

® Ministry of Business Innovation and Employment

Go to homepage business.govt.nz business.govt.nz

Business.govt.nz, in association with, claiming expenses when away on business.

You can claim for lots of daily expenses when you’re travelling for work. If you take a holiday as part of the same trip, you can only claim for the parts of the trip that were work-related.

What you can claim

In general, when you’re away from home you can claim for:

• taxis, or mileage if you use your own car for business travel
• accommodation
• meals and snacks.

Accommodation

If you’re attending a work-related meeting, conference or training course that requires an overnight stay, you can claim the cost of accommodation, eg hotel, motel or short-term rental.

If an employee is working away from home for an extended period, eg on secondment, you can claim for accommodation, or any accommodation allowance you pay, as long as they won’t be gone for more than two years (or three years for capital projects).

Accommodation allowances (external link) — Inland Revenue

Food and drink

If you or one of your employees buys a meal while travelling on business, the cost is 100% deductible.

But you can only deduct 50% of the cost of food and drink if either:

• The trip is mainly for the purpose of enjoying entertainment, eg a team bonding trip.
• The meal or function involves an existing or potential business contact as a guest.
• A celebration where you won’t be working, eg a reception, or a staff Christmas party.

You or your employees can also claim for snacks and refreshments, eg tea and coffee, while they’re away if you normally provide these refreshments at work.

Meal and clothing allowances (external link) — Inland Revenue

Entertainment

On a work trip, you can claim the cost of entertainment if its purpose was to:

• build up business contacts, eg taking a potential client out for dinner
• keep your employees happy, eg providing tickets to a show
• promote your goods or services, eg offering food to entice customers to a stall at an expo.

If the entertainment is helping you earn your income, it's usually deductible when it's time to work out your tax.

Within New Zealand, entertainment expenses can be either 50% or 100% claimable — check with Inland Revenue.

If you’re travelling overseas, you can claim 100% of work-related entertainment expenses.

Entertainment expenses (external link) — Inland Revenue

Employee allowances

Claiming expenses

If an employee is on a work trip, you can pay them an allowance to cover meals and day-to-day expenses.

You can claim this allowance as a business expense at tax time.

Travelling allowances (external link) — Inland Revenue

Crafty in the capital

Dom runs a boutique craft supplies shop based in the Bay of Plenty. Keen to expand his customer base — and explore new product options — he decides to run a booth at an expo in Wellington.

This involves a one-night stay in the capital. During the day, he attends the expo. In the evening, he takes a contact out for dinner to discuss a potential new line of stock for the store. He pays for everything on his business’s credit card, and keeps receipts.

Dom can claim:

• 100% of the cost of his flights
• 100% of taxi fares to and from the airport, and around Wellington
• 100% of his night’s accommodation
• 100% of the cost of breakfast and lunch
• 50% of dinner with the business contact.

Overseas travel expenses

Keep detailed records if you’re travelling overseas on business — especially if you’re also taking a holiday at the same time.

• You’re away on business but take a free half-day to enjoy exploring a new city, the personal part of the trip is incidental. You can claim all your travel expenses.
• You’re going on holiday but happen to meet up with a couple of business contacts while you’re there, the business part of the trip is incidental to the holiday. You can’t claim any of your travel expenses.

If you combine a business trip with a holiday, you must split out your expenses and only claim the portion that relate to the working part of the trip.

The best way to do this is to keep an itinerary or diary. It should provide enough information to calculate all your costs and make a reasonable split between business and personal expenses.

As well as all the usual records, you should keep:

• letters of introduction
• business contacts/cards
• details of firms visited and business conducted
• details of time out from the business itinerary for personal purposes.

Overseas travel expenses don’t generally include GST.

Mixing business with pleasure.

Jan is a software engineer who works as a self-employed contractor. She pays for herself to attend a two-day software conference in Miami. While there, she takes an extra four days to travel around Florida and visit Disney World with her partner.

Jan can claim:

• two nights of accommodation while at the conference
• the cost of her meals on those two days — but not her partner’s meals
• taxi fares to and from the airport, and from the hotel to the conference each day
• one third of the cost of her flights (but not her partner’s), because two of the six days she’s away are for business.

She can’t claim any expenses from the portion of her trip when she wasn’t working — these are holiday costs .

Jan talks to her accountant about claiming expenses when mixing business and personal travel. She then contacts Inland Revenue about her partner’s expenses, and is asked to send a detailed itinerary and total costs of the trip. This is because there are some circumstances when business travellers may be able to claim some of a partner’s expenses if they travel together.

Travel to buy assets or equipment

If the purpose of the trip is to buy business assets, travel expenses are usually treated as part of the cost of the asset — they’re a capital expense and can’t be claimed.

Business assets are the tools and equipment of your trade. A business asset could be a printing press or the art hanging in your office, as long as it:

• is valued at more than $500
• has a useful life of more than one year
• can't be claimed in full as a business expense.

Assets (external link) — Inland Revenue

Common business asset checklists

Try to pay for anything that could be a claimable expense through your business account.

Then you've got an easy-to-record paper trail.

Records to keep

Keep all expense receipts and invoices you receive — you don't need to provide the receipts with your tax return, but will need them on hand if Inland Revenue asks for proof.

As well as invoices, receipts and tickets, you should also keep details of:

• reasons for the trip
• date of the trip
• your itinerary
• cost of car hire, and air, bus and taxi fares
• cost of accommodation, meals and incidentals, eg coffees or morning tea
• time spent on business and personal activities — a good way to prove the business portion of your travel expenses is by keeping a diary of your travels.

How useful did you find this article?

"Rate this" is required

You must enable JavaScript to submit this form

Related content

Quiz: what can i claim for.

Test yourself on what expenses you can claim. Then follow links from the answers to find out more.

How expenses can help reduce tax bills

Offsetting expenses against income can help with your tax bill. But you’ll need to know what to claim for, and how.

FBT on Christmas parties and presents

Christmas functions or giving gifts to employees might be business expenses - but what are the tax considerations?

Quiz: Tax 201

Test yourself on the difference between fringe benefits tax and employee allowances.

Call us on 09 366 6005

• Our Core Values
• Our Clients
• Auditing & Assurance
• Business Advisory
• Tax & Compliance
• Virtual CFO

Updates & Articles

• COVID19 Business Support
• Terms of Engagement
• Privacy Policy

Travel Allowances and Tax

As an employer, you may pay cash allowances to reimburse an employee for travel between home and work. For a travel allowance to be tax-free, the travel must be ‘on work’ rather than just ‘getting to work’. A tax-free travel allowance must be for travel costs on top of the usual cost of travel between home and work and the travel must be work-related.

The tax-free amount is the actual cost of travelling between home and work, less the employee's usual transport costs. The amount for the employee's usual travel costs is taxable.

Where the employee is using their own vehicle, you can use Inland Revenue’s rates to calculate costs.

Where an employee works from home, and travels for work, a travel allowance or reimbursement would be tax-free when:

• the employee’s home is their base of operations (or one of them) and their work takes them all over the place
• the employee is on call at home and must travel to emergency callouts
• the travel is ‘on work’ between two workplaces, one of which is also the employee’s home.

The tax treatment for travel from home to a distant workplace takes other factors into account as well.

Keep in mind that a travel allowance is considered to be tax-free if it pays an employee back for travel that is somehow additional to what they would normally undertake to go to and from work. Where paying allowances for travel, make a note of the special circumstances which justify the allowance being tax-free.

Download the guide to Travel Allowances & Tax

walker wayland —

— keep reading

Travel Allowances and Tax

by Walker Wayland Team | Sep 23, 2021 | Business Growth , Tax Update

Travel Allowances

A tax-free travel allowance must be for travel costs on top of the usual cost of travel between home and work and it must be work-related. For instance, the employee may incur travel costs on top of their normal travel between home and work, if the employee:  is working outside the normal hours of work, as in overtime, shift, or weekend work For example: A commercial cleaner travels by bus to start work at 8pm and finishes at midnight, when there is no bus available to travel home. The employee travels home by taxi.  needs to carry work-related tools and equipment which they don’t normally need to carry For example: The company van/truck is double-booked, and the employee uses their own van/truck to complete business deliveries.  is travelling to do something you need done for your business For example: You need the employee to carry out periodic safety inspections of equipment installed for a number of clients at their plants and factories.  has a temporary change in workplace For example: An employee is assigned to work at another branch across town for eight months. He or she incurs the cost of additional bus trips for that period.  is travelling to a worksite and there is no adequate public transport

Calculating the tax-free amount

For all of these special circumstances, except lack of adequate public transport, the tax-free amount is the actual cost of travelling between home and work, less the employee’s usual transport costs. The amount equating to the employee’s usual travel costs is taxable. If you pay a travelling allowance because there’s a lack of adequate public transport, the first $5 of the daily travelling allowance is taxable with any additional amount being tax-free. Where the employee is using their own vehicle, you can use Inland Revenue’s rates if the actual cost per kilometre is not available.

What do I have to do?

 Add the amount of the allowance to your employee’s net salary or wages (i.e. after PAYE) when you pay them  Do not show the tax-free amount when filing employment information  Show the total amount of the tax-free allowance paid in your wage book

What about where the employee works from home?

The decision that a travel allowance you pay an employee is tax-free relies on the travel being ‘on work’ rather than just ‘getting to work’. A travel allowance or reimbursement would be tax-free when:  the employee’s home is their base of operations (or one of them) and their work takes them all over the place  the employee is on call at home and must travel to emergency callouts  the travel is ‘on work’ between two workplaces, one of which is also the employee’s home

Keep in mind

The travel allowance is considered to be tax-free if it pays an employee back for travel that is somehow additional to what they would normally undertake to go to and from work. Where paying allowances for travel, make a note of the special circumstances which justify the allowance being taxfree.

If you’d like to talk more about travel allowances or about record-keeping for payroll, let us know.

—Related Posts

2024 Year End Tax Alert

Relief for farmers and growers for flooding in Tasman, Nelson, Marlborough and Far North.

Have you thought about income equalisation?

Upcoming tax deadlines in August

Staying on top of Business Cash flow with rising construction costs

• Employer of Record
• I'm an Employee
• Available Countries
• Global Taxes
• Case Studies
• Guides & eBooks
• HR Glossary
• Video Series
• Partnerships
• Get Started

Taxes in New Zealand

• New Zealand
• Employment cost calculator
• Employee Rights
• Employment Conditions
• Remote Work
• Hours of Work
• End of Employment
• Independent Contracting

Employer Contributions in New Zealand

Tax is withheld by the employer from employee's payments through payroll and paid to the Inland Revenue Department.

Accident compensation levy

Employers and employees contribute to a statutory accident insurance scheme. Employers pay premiums for work-related accidents insurance. Employers have to pay a residual claims levy and an employer levy. The amount of the levy that employers pay is determined according to the industry or risk classification and employees' earnings.

Employer superannuation contribution tax (ESCT)

The contributions employers make to an approved superannuation fund (excluding foreign schemes) are subject to ESCT. This includes employer contributions to KiwiSaver (or other qualifying registered superannuation schemes).

ESCT is generally deducted at the employee's applicable progressive rate based on the total salary or wages and employer superannuation cash contributions paid to the employee in the previous year.

Superannuation 

Kiwisaver scheme.

The KiwiSaver is a workplace-based superannuation savings scheme that operates on a voluntary basis and is available to all employees older than 18. Employers must contribute on behalf of all employees who are members. Employers must calculate ESCT at a rate equivalent to an employee's annual salary and wage plus the employer's gross yearly contribution. The minimum contribution rate for both employee and employer is  3%  each   of the gross salary .

Fringe benefit tax (FBT)

New Zealand is one of the countries where employers are responsible for the fringe benefits tax. It's paid on the value of all non-cash fringe benefits provided to employees, and the amount is tax-deductible. Employers can decide to pay the tax at flat rates (63.93% on attributed benefits and 49.25% on pool benefits) or calculate it for each employee and pay the tax based on their marginal tax rate

Under the latter attribution option, the applicable FBT rate will depend on the employee's net salary (including fringe benefits). The calculation takes the fringe benefits' cash value and calculates the FBT as the notional increase in income that would have arisen.

Fringe benefits include:

• Motor vehicles available for private use
• Loans below prescribed interest rates
• Discounted goods and services
• Contributions to medical insurance schemes
• Non-monetary employer contributions to superannuation schemes

These are not taxable to the employee, but the value of a benefit from the provision of shares or options, lodging, or housing by an employer is taxable. Other benefits provided to an employee in a non-monetary form are generally not taxable in the employee's hands.

Allowances paid in cash that are no more than reimbursement of business-related expenses incurred within employment are generally not taxable. Certain relocation costs, overtime meal allowances, and accommodation benefits paid by employers are exempt from income tax and FBT. Business tools such as mobile phone or laptop provided for work that do not exceed NZ$5,000 are not subject to FBT.

The tax threshold for exempting unclassified FBT benefits is NZ$300 per employee per quarter and NZ$22,500 per employer per annum.

Employee Contributions in New Zealand

New Zealand residents are subject to tax on their worldwide income, which includes salary, wages, bonuses, allowances, and retirement gratuities received in cash. Individuals are considered New Zealand residents in the following circumstances:

• Permanent place of residence:  New Zealand is the permanent place of residence regardless of how long the individual has been outside of the country
• Presence of more than 183 days:  the individual has spent more than 183 days in New Zealand in a given year.

Non-resident pay tax only on their New Zealand income. They may be exempt from paying New Zealand tax if all the following conditions apply:

• Their visits do not exceed 92 days in the income year
• They are liable for income tax on New Zealand-sourced income in their country of residence
• The individual paying the non-resident is themselves not resident in New Zealand

Foreign income tax exemption

There is a temporary four-year tax exemption from income tax on foreign income, which is extended to new immigrants and Kiwis returning to New Zealand after being away for at least ten years. It applies to people becoming residents in New Zealand after April 1, 2006. They can receive the exemption only once in a lifetime. Income from overseas employment performed while living in New Zealand and business income relating to services performed offshore is excluded.

KiwiSaver is a voluntary workplace-based superannuation savings scheme available to all employees over the age of 18. Employers automatically enrol new employees who must opt-out within prescribed time frames if they wanted to. The minimum contribution rate for both the employee and the employer is  3%  of gross salary .

Accident compensation levy (ACC)

This is known as the Accident Compensation Corporation (ACC). Employer premiums fund insurance for work-related accidents while premiums paid by employees fund non-work accident insurance. For the 2023/2024 year, the premium is a flat rate of 1.53% of gross earnings up to NZ$139,384.

Resident Income Tax 

Married people are taxed separately.

Ta x-Free Allowance in New Zealand

Best start tax credit.

Best Start helps families with child care costs after the paid parental leave ends. All families with new babies are entitled to NZ$69 a week during the child's 1st year. If the household income is less than NZ$96,295, they will continue to receive $69 per week until the child turns three.

Personal tax credits

Individuals with annual income between NZ$24,000 and NZ$44,000, who meet specific requirements are entitled to an 'independent earner' tax credit of NZ$10.00 per week. For eligible individuals who earn between NZ$44,001 and NZ$48,000, the annual entitlement decreases by 13 cents on each additional dollar earned up to NZ$44,000.

Credit for charitable donations

An individual can claim a 33.3% tax credit for eligible charitable donations, up to their taxable income.

Employers can choose to provide allowances on top of employees' usual pay in the form of extra money for things like accommodation, meals and clothing. These allowances are taxed through PAYE.

Accommodation allowances

Generally, an accommodation or an accommodation allowance is taxable via PAYE, with some tax-free exemptions:

• staying overnight in an accommodation due to attendance of a work-related meeting, conference or training course
• working from a location, they cannot easily travel to daily

Meal and clothing allowances

Allowances to help cover the costs of meals and clothing employees have to buy as part of their job are usually tax-exempt. Some examples include:

• Payments to cover meals for employees who are working away from the employer's premises
• Payments covering the cost of clothing for work, such as uniforms or protective gear

Travel allowances

These allowances are specifically for employees travelling from their home to work. This allowance is taxed via PAYE unless the employee is:

• Working outside their regular hours, e.g. overtime, shift or weekend work
• Carrying work-related tools and equipment, e.g. the employee usually takes the bus to work but must use a taxi or their vehicle to transport work-related gear.
• Travelling for business purposes
• Having a temporary change in the workplace
• Does not have access to adequate public transport system to the workplace

Benefit allowances

Cash benefits made in addition to an employee's salary or wages are taxable, and include things like:

• Food allowances (payments to subsidise meals at a workplace cafe or canteen)
• Clothing allowances (to buy a suit to wear at work, but not a uniform)

Reimbursing allowances

Unexpected on-the-job expenses that employees incur, such as paying for meals or travel when they're away from their typical workplace, should be refunded to them by their employer. 

Employees are reimbursed either by providing receipts or by the employer, making a reasonable reimbursement estimate. Reimbursements are generally added to the salary of the employee after their PAYE has been deducted. Reimbursed expenses are not taxable. However, if the payment is more than the cost, the excess amount is taxable.

Relocation allowances

Employers sometimes cover the employee's own and their family relocation costs. The payment may be tax-free if they are relocating to:

• Start employment with the company
• Start a new role at a new location with the company
• Stay in their current position but move to a new location

Relocation expenses will generally only be tax-free if the employee's home is a substantial travelling distance from the new workplace.

Boundless for employers

Boundless for employees.

Are my employees entitled to compensation for work travel?

20 June 2022

Commuting to work isn’t something everyone enjoys, but for some employees, travelling for work is an inescapable part of their job. And while there’s no specific legal entitlement to allowances, employees and employers can come to an agreement that recognises travelling for work as a component of their role. We’re not just talking about people for whom travelling is the nature of the job, but also professions that require attendance at face-to-face meetings or in-person visits to stores, sites, or houses.

If you have employees who are required to travel away from their primary place of work to complete their job, it’s considered good practice to reimburse or suitably compensate them should they incur costs carrying out such work.

Here we explain what travelling for work entails, the differences between expenses, reimbursements, and allowances, and why employers can’t afford to get it wrong.

1. Expenses

If you’ve any employees who are travelling for work as a required part of their duties, it’s important that you clearly outline how the travel expenses will be paid. Some examples include:

• the business provides the employee with the property they can use for work-related travel purposes such as a company car, a fuel card, or vouchers;
• the business bears the travel expenses by booking and paying for transport, accommodation, and meals in advance;
• the employee bears the travel expenses and is later reimbursed that amount by the business; or
• the employee is provided with a travel allowance or lump sum payment to cover the anticipated costs of travel.

Whichever method you choose for your business, it needs to be communicated to your employees. If an employee is allocated company property like a motor vehicle or fuel card, you should consider implementing relevant policies to govern how company property operates. For example, you should think about whether the employee is permitted to utilise it for reasonable personal use or whether it should be strictly confined to authorised business use.

2. Reimbursements

If you’re required to reimburse the employee, ensure that you advise your employees to obtain and keep receipts for all expenses which should be produced to the business before the reimbursement will be made.

We also recommend that you implement a policy outlining what’ll be considered reasonable and unreasonable expenses or requiring that expenses be approved in advance by the business if you prefer.

3. Allowances

You may choose to implement a form of vehicle or travelling allowance intended to compensate employees for the inconvenience of out-of-pocket expenses of travel. This is commonly expressed as a per-kilometre mileage rate so you should require such employees to keep a detailed logbook of their work-related travel including recording the odometer at the start and end of each journey to ensure you’re paying them the correct allowance.  Mileage rates must follow the Inland Revenue guidelines.

For salaried employees, you may wish to incorporate a vehicle allowance into the annualised salary amount. This’ll require an estimate of the kilometres the employee is expected to travel during the year, which may not always be easy to calculate. If in doubt, round up and round up again – the last thing you want is an underpayment claim when we’re only talking about a matter of cents per kilometre travelled.

4. Travelling time

Employees should usually be paid for time spent travelling for work-related purposes, as it’s part of their duties as much as answering phones, writing reports, or providing customer service. However, it’s important to note that whether an employee is entitled to be paid for travelling time will depend on the situation, and the employment agreement or workplace policies that are in place.

Time spent getting to and from work doesn’t normally need to be compensated; the costs of this travel are borne by the employees themselves. There are exceptions to this however such as if the employee is being temporarily, or even permanently, relocated from their primary place of work. Look into what the additional travel time will mean for the employee and what kinds of additional expenses may be incurred as a result of this, and what kind of compensation will be considered reasonable under the circumstances.

Keeping track of travel expenses, reimbursements, and allowances can be tricky, but you can’t afford to get it wrong. For more information about how to manage travel for work, please reach out to our experts via our 24/7 Telephone Advisory Service .

• Your email address *
• Comments This field is for validation purposes and should be left unchanged.

Remote work may separate teams. Here are 5 strategies to bring people together

Can we eradicate workplace sexism here are 7 steps towards progress, 7 steps to fix clashes in your team, take your hr to the next level.

Call us on our toll-free number:

Or fill out the form and we’ll get back to you soon.

• First name *
• Last name *
• Phone number *
• Number of employees *
• Message (optional)
• By submitting your details, you may receive occasional updates from us as set up in our Privacy Policy .

Work homepage

We can help you get ready to apply and find the right job for you. We can even help you while you're working.

Get ready to work

You can get training, help with CVs and cover letters, and advice for job interviews.

Find out what jobs are available, which job is best for you and how you can plan your career.

Whether you've just started a job or need some help at work, we've got your back.

Lost your job

We'll help you get ready to find a new job and support you while you're between jobs.

Start your own business

Get help to plan and set up a successful business or be a self-employed contractor.

Benefits and payments homepage

Take a look at the range of benefits and payments we have available.

Not working

Redundancy, health condition or disability or another reason you can’t work

• Living expenses

Food, school costs, power, accommodation or other living expenses you need help with

Relationship changes

You’ve had a relationship break-up, family breakdown or violent relationship end

Health and Disability

Counselling, prescription and GP costs, medical alarms and other costs we can help with

Travelling overseas, how to apply, payment rates and dates, overseas pensions, income and other info for Seniors

Caring for someone else’s child or someone with a health condition, injury or disability

Urgent or unexpected costs

Dental, glasses, car repairs, fridge, washing machine, funeral or other urgent costs you need help with

Childcare, school uniforms, stationery, having a baby and other costs if you have children

Moving to New Zealand

Payments you can get from us, settling into NZ, overseas pensions and more.

Benefits and forms

A-Z list of benefits, forms, benefit rates

On a benefit homepage

Check out what you need to do when you're getting a benefit or other payment from us.

Something's changed

Address, contact details, overseas travel, childcare, relationship or anything else that’s changed.

Declare income and income deduction tables

Change in your childcare situation, continue childcare payments, cohort entry schools and other childcare information

Going overseas

Going on holiday or going to live overseas

Re-apply for Jobseeker Support, Sole Parent Support, Temporary Additional Support and more

Check or stop your payments, payment cards and other information

Check your debt, repayments and other debt information

Rights and responsibilities

Our commitment to you,  obligations, complaints, benefit fraud and more

Housing homepage

Find out how we can help you with housing.

Nowhere to stay

Get help if you have nowhere to stay right now.

Find a house

Find out where to look for private housing, or apply for public (social) housing.

Living in your home

Get help with accommodation costs, and advice on any housing issues and public housing tenancies.

Find out how we can help if you’re moving house.

Other languages

Read some of our housing information in other languages.

• Go to the Work and Income home page

Benefits and payments

• Emergencies
• Vehicle modification
• Contraception
• Counselling
• Dental treatment
• House modification
• Medical alarms
• Healthcare costs
• Residential care
• Travel costs
• You're not working
• Relationships
• Urgent costs
• Moving to NZ

Travel and accommodation costs

We may be able to help with health-related travel and accommodation costs.

• You don't have to be on a benefit to qualify.
• You don't have to pay the money back.

Who can get it

You may be able to get help if you:

• are 16 or over (if you're 16-19 and have a Youth Service provider, contact Youth Services )
• are a New Zealand citizen or permanent resident
• normally live in New Zealand and intend to stay here
• have an immediate and essential need
• are referred to a hospital or other health service for medical treatment, assessments or services by a registered health practitioner
• from a Health Agency
• under the National Travel Assistance Scheme
• from a Disability Allowance.

We can only help with travel costs if they are for a one-off appointment, eg day surgery or consultations.

If your travel or accommodation cost is covered by ACC, we may still be able to help. Talk to us about your situation.

It also depends on:

• how much you and your partner earn
• any money or assets you and your partner have.

Current income limits

Asset limits.

These don't include what you need for day-to-day living, e.g. your home, car, and some payments after a severe weather event. They do include things like money in the bank, or a second property.

What you can get

We generally pay up to $300 in a year. But it depends on your situation.

We can pay for actual and reasonable:

• travel costs for a return journey of at least 8 kms to the place of treatment, assessment or services
• accommodation and meal costs if you need to stay away from home overnight to attend the treatment, assessment or services.

How to apply

You need to call us on 0800 559 009

We'll book you an appointment to come in and see us and let you know what you need to bring.