It is commonplace in rural New Zealand, more so than urban areas, to provide some workers with free or subsidised accommodation.
The problem with this is nothing in life is free, and employee accommodation is just another example.
By providing free or subsidised accommodation the employer creates a tax liability for themselves as the current tax law treats the value of the accommodation as a taxable allowance to the employee.
The fact that this is a taxable allowance can be missed when employment agreements are being negotiated and signed off. It will add an additional cash cost to the employer for the PAYE due on the allowance as well as potential employer Kiwisaver contributions.
It will also increase the employees' taxable income each pay period, which can influence KiwiSaver, Working for Families entitlements, Student Loan repayments and Child Support obligations.