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You can reimburse employees for actual expenses they've incurred while doing their job. These expenses include:

  • meals
  • clothing
  • mileage
  • tools.

Reimbursing allowances are not taxable. However, if the payment is more than the employment related expenses, the excess amount is taxable.

To calculate the reimbursement allowance, you need the employee to provide a receipt. This needs to be based on average costs and be a reasonable amount. Add the amount of tax-free allowance to your employee's net salary or wages (after PAYE) when you pay them. Show the total tax free allowance paid in your wage book. Do not show the tax free amount on your employment information schedule.

Alternatively, if you are regularly reimbursing the employee for a particular cost, you could pay them a regular allowance instead. 

KiwiSaver employee deductions are calculated on the excess amount at the employee's normal rate according to the agreement between the employer and the employee. 

Last updated: 27 May 2020
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