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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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