Employees increasingly work from home, whether part- or full-time. It’s raised questions about how to reimburse employees for associated costs and whether businesses can claim deductions for reimbursements.

Inland Revenue has released guidance on the tax treatment of reimbursements for increased household costs due to work from home, employees’ work use of telecommunications devices and plans, and where employees have purchased furniture or equipment to enable them to work from home effectively. Their guidance also indicates where employers have options depending on what the reimbursement is for.

Where you provide phones or devices used by an employee for work, the cost of the device and usage plan is deductible. Be aware of FBT implications if the employee also uses the device for their own use.

Reimbursements for office furniture or equipment may require you to identify the cost of the asset and whether the asset is being used exclusively or principally for employment or principally for private use. For some assets you may also need to calculate relevant depreciation loss.

When you reimburse employees for equipment they need for work, you may claim those as tax deductions. If calculating reimbursements proportionate to work use, keep records of how you arrived at that.

We can talk you through how the guidelines apply to your business, as well as calculating and documenting reimbursements.

For more information, download the guide.