The IRD has released an Operational Statement discussing whether employer-provided travel from an employee’s home to a distant workplace is taxable or not.

The Statement confirms that employer-provided travel from home to a distant workplace will be subject to income tax or FBT. The rules however, exclude one-off travel, a temporary posting or secondment travel (up to 2 years), employees who work at a hometown workplace and employees who work from home on specified days. The expenditure that relates to travel that is “on work” is also exempt.  

If the employee received an allowance or reimbursement in relation to the travel, that amount may be subject to income tax. If an allowance or reimbursement is taxable for income tax purposes, then the employer is required to deduct and pay PAYE in relation to that payment.