Appendix A: Comparison of current and suggested treatment of key employee expenditure payments

Type of payment	Current treatment	Suggested
Payment for employee’s meal expenses during work travel	The amount the employee saves on day-to-day meal costs during work travel may be taxable because meal costs are generally treated as private expenditure. In practice, employers do not tax payments regardless of duration of travel.	Payment tax-free if duration of travel to particular work location is no more than 3 months. Taxable in full for longer trips.
Payment for work-related meals outside of work travel	As for work travel, the amount the employee saves on their meal costs is taxable because it is private expenditure. In practice, employers do not tax these payments.	Payment tax-free if not regular payment for employee services.
Payment for employee’s accommodation expenses during work travel	While generally not taxable, there may be circumstances when the expenditure is of a private nature and therefore taxable. In practice, employers do not tax these payments.	Payment tax-free if duration of work travel to particular work location is no more than 12 months. Taxable in full for longer trips.
Payment for accommodation costs outside of work travel	The payment is taxable because accommodation is a private cost.	No change, the payment would be taxable.
Employer provides accommodation at or near work place	The market value of accommodation is taxable. In practice this is interpreted to mean rental value and can take into account any contribution from the employee.	Confirm the legislation to ensure taxable value is rental value, subject to any employee contribution.
Payment for accommodation costs where more than one permanent work place	In some circumstances the payment may be taxable because accommodation is a private cost.	Special rules to ensure that a payment to meet accommodation costs at one location is not taxable in certain circumstances.
Payment for accommodation costs for employees seconded overseas who remain NZ tax resident	The payment is taxable, at a value based on market rent in the overseas location.	Special rules to limit tax value – for example, NZ equivalent rent.
Payment for communications (including telephone and internet)	The value of any private expenditure is taxable and in practice this will mean an apportionment is required according to the private/work-related split.	Taxable in full except where private/work element able to be separately identified.
Payment for work-related clothing	The payment is not taxable if the payment is for work uniform/specialist clothing.	Confirm not taxable only when payment is for a work uniform/specialist clothing.