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IRD payments & allowances update 23 Dec 2010

The IRD recently updated and clarified some of its legislation relating to the treatment of relocation payments, overtime meal allowances and sustenance allowances. If you have taxed any of these since the 2002 – 2003 income year, you might be entitled to a PAYE credit – depending on whether the tax-free conditions for each category have been met. A PAYE adjustment can be claimed by completing the Employer monthly schedule amendments (IR344) form. The IRD should also be informed in writing of any adjustments to income tax returns.

Relocation payments are tax-free when:

relocation is required as a result of new employment or a change of location.
the employee’s existing home is not within reasonable travelling distance
the expensive is part of the eligible relocation expensive list
the payment is no more than the actual expenditure
the expenditure occurred before the end of the tax year during which the employee relocated

Overtime meal allowances are tax-free when:

the employee’s contract or employer’s policies specify overtime meal allowances
the payment is no more than the actual cost incurred
the employee has worked at least two hours of overtime

Sustenance allowances are tax-free when:

there is an established policy of paying sustenance allowance
the employee works a minimum of 7 hours per day
the employee is required to work outdoors, away from their employment or is required to undertake a long period of physical activity in travelling
it is not practical to provide sufficient sustenance to the employee

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