Covid 19 Delta outbreak: Accountants call for permanent legislative fix to work from home tax extension

The extension of tax relief for employers with employees working from home comes not a moment too soon, says Chartered Accountants NZ tax leader. Photo / 123rf

New Zealand chartered accountants say the country needs a permanent tax policy for working from home as the Delta lockdown brings elongated relief for employers with staff out-of-the office.

Chartered Accountants Australia and New Zealand welcomed the extension of working from home tax changes but added the current level 4 restrictions show Aotearoa requires fixed policy.

"The extension of tax relief for employers with employees working from home comes not a moment too soon, given the latest Covid lockdowns," Chartered Accountants NZ tax leader John Cuthbertson said.

"The latest lockdown shows that our new way of working is here to stay, and that a permanent working from home tax policy is needed."

Cuthbertson said this is the third time there has been extension and modified working from home determinations.

"It's time for a legislative fix."

As people work from home, they incur more expenses on utilities such as internet, power and heating, Cuthbertson added.

Under the extended determination, employers have the option to reimburse employees $20 per week tax free, before needing evidence of the expenses.

"One benefit of the new determination is that the previously fragmented tax advice on working from home is now combined," Cuthbertson said.

"The public should note that the 'bring your own device' tax guidance is in this determination, even though it's not strictly limited to working from home. There is a natural fit for it to be here."

The determination also has been extended until 2023.

"And as before there is no need to relate working from home expenses to Covid lockdowns – the guidance applies no matter what the reason for working from home is," Cuthbertson said.

"Of course, employers wanting to reimburse staff for higher actual costs whilst working from home can do so, but they need to keep accurate, detailed records."

Inland Revenue said with many employees now working from home due to the global pandemic there were some instances when an employer may provide a special allowance to cover extra costs.

The employer will need to determine if this allowance is taxable or not.

However, IRD states on its website, in many cases the employee will be expected to bear these additional costs.

"If you're working for an employer, you're generally not able to deduct any costs incurred from income earned. Expenses you pay because you're working from home cannot be claimed against your income."

If self-employed, you may be able to claim some of these expenses.