When you pay for an employee's accommodation or pay them an accommodation allowance, the taxable value is the amount paid:
- less any contributions from the employee, such as rent paid
- after any adjustments for business/work use of the premises.
When you provide an employee with accommodation, the taxable value is the market rental value of the accommodation:
- less any contributions from the employee, such as rent paid
- after any adjustments for business/work use of the premises
- after any adjustments for when employees share accommodation.
Market value of rental accommodation
Business work use of space
The accommodation you provide an employee might have an office or other space which is used for work purposes. This can be deducted from the taxable amount.
To qualify, a clearly identifiable part of the accommodation needs to be used mainly for work. Any use of the space which isn’t work related needs to be temporary.
The deduction is determined by apportioning between the business and private use. This is based on the floor area of the accommodation.
When employees share accommodation
When two or more employees share accommodation that you provide, the taxable amount is divided equally or on another reasonable basis between the employees.
You have hired a new employee and provided them with an apartment. The apartment includes an office that the employee mainly uses for work, but they occasionally use the computer there to check personal emails and Skype with friends – this is only minor, so does not have any impact on the taxable value. The apartment is 60 square metres, and the office is 12 square metres (20% of the apartment’s floor area). The apartment has a market rental value of $500 a week so $100 (20% of $500) is deducted from the weekly taxable amount.