Employee reimbursements for WFH

You may recall when Covid first hit our shores and we were forced into lockdown with everyone working from home (or at least those of us who were lucky enough to be able to). Inland Revenue (IR) released a number of determinations, reflective of the fact that employers were reimbursing their employees for the additional costs now being occurred due to the WFH scenario.

The last of those Determinations, Determination EE003, is set to expire on 31st March 2023. Consequently, IR has now issued Determination EE004 – ‘Tax treatment of reimbursing payments made to employees that work from home and/or payments made for an employee’s use of their personal telecommunications tools and/or usage plans in their employment.’ This time around, however, the determination is for an indefinite period, with IR continuing to monitor and update if appropriate.

The easiest way to start off addressing any payment to an employee by an employer, is that it is taxable to the employee unless you can then locate a specific exemption for the payment. The place where you will most likely find an exemption in relation to the present topic, is within the provisions of section CW 17 of the ITA07.