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Allowances Travel and Mileage
Our guide to employers who pay travel allowances to employees for use of their own vehicle for work purposes.
Employees who are required to travel for the benefit of the employer are entitled to be reimbursed without being taxed for the expense associated with that travel. Any amount that is in excess of reimbursing an employee’s costs is considered a benefit allowance and is therefore taxable. Two methods of calculating the tax free amount are detailed below; these are actual expenditure, and reimbursing rates. Travel allowances are used to compensate an employee for travel between home and work, where certain conditions have been met.
Employers can use either actual expenditure or mileage rates to calculate tax free reimbursement of travel expenses.
Travel allowances may also be paid for employees’ travel between home and work. These must be taxed where the benefit is greater than the cost to the employee.
Employers can either use the published IRD rates or those of a reputable independent New Zealand source representing a reasonable estimate (e.g. New Zealand Automobile Association Inc rates).
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