Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Employee or contractor income

CE 1: Amounts derived in connection with employment

You could also call this:

“Income you must include from your job or service”

You must include certain amounts you get from your job or service as income. These include:

  • Your salary, wages, allowances, bonuses, extra pay, or tips
  • Money your employer spends on things for you
  • The value of accommodation your employer provides for you
  • Benefits you get from an employee share scheme
  • Directors’ fees
  • Money you get if you lose your job
  • Any other money benefits

If your employer pays you too much by mistake:

  • You usually need to count it as income in the year you get it
  • But you don’t have to count it as income if you’ve already paid it back, you have an agreement to pay it back, or ACC can recover it

‘Accommodation’ includes:

  • Board or lodging
  • Use of a house or living space, even if it’s temporary

But it doesn’t include things like:

  • A room on a work vehicle like a ship or truck
  • A room for shift workers who need to sleep at work sometimes
  • A room at a remote work site outside New Zealand

The government can make rules to exclude other types of accommodation from these rules.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512779.

Topics:
Money and consumer rights > Taxes
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“Employer-provided accommodation or housing payments count as income”

Part C Income
Employee or contractor income

CE 1Amounts derived in connection with employment

  1. The following amounts derived by a person in connection with their employment or service are income of the person:

  2. salary or wages or an allowance, bonus, extra pay, or gratuity:
    1. expenditure on account of an employee that is expenditure on account of the person:
      1. the value of accommodation referred to in sections CE 1B to CE 1E:
          1. a benefit received under an employee share scheme:
            1. directors’ fees:
              1. compensation for loss of employment or service:
                1. any other benefit in money.

                  1. Repealed

                  2. A person who receives an amount that is an unrepaid PAYE income overpayment is treated as deriving the amount in connection with their employment or service—

                  3. for the income year in which they receive the amount, if paragraph (b) does not apply; or
                    1. on the payday for which the employment income information of the employer who paid the amount to the person includes an upwards adjustment for the amount under regulations made under section 23N of the Tax Administration Act 1994.

                      1. An amount received by a person that is a PAYE-related overpayment is not income of the person to the extent to which—

                      2. the amount has been repaid to the employer who paid the amount to the person:
                        1. the amount is repayable to that employer by the person under an agreement between them and none of the following apply:
                          1. the person breaches the agreement and does not remedy the breach within 2 months:
                            1. that employer considers that the person will not comply with the agreement in the future:
                            2. the amount is recoverable under section 248 of the Accident Compensation Act 2001.

                              1. For the purposes of this section, and sections CE 1B to CE 1E, CW 16B to CW 16F, CW 17CB, CZ 23, CZ 23B, and CZ 29 to CZ 30 (which relate to accommodation provided in connection with employment), accommodation—

                              2. includes—
                                1. board or lodging:
                                  1. the use of a house or living premises, or the use of part of a house or living premises, whether permanent or temporary:
                                  2. does not include—
                                    1. a berth, room, or other lodging provided on a mobile workplace, for example, a ship, a truck, an oil rig, or other similar workplace:
                                      1. a station in Antarctica:
                                        1. a room or lodging that is provided for a shift worker who is required in the performance of their employment duties periodically to sleep at their workplace when the accommodation is provided only for the duration of the performance of those duties, for example, fire-fighters, ambulance staff, care-givers, and other similar employees:
                                          1. the use of a room or other dwelling provided at a remote location outside New Zealand when a person's employment duties require them to work at the location for a period and also require them to be absent from the location for a period, for example, miners in Australia who regularly fly to and from a mining camp and other similar employees.

                                          2. Employer,—

                                          3. in this section, in sections CE 1B, CW 16B to CW 16F, CZ 23B, and CZ 29 to CZ 30 (which relate to accommodation provided in connection with employment), and in the definition of employee, paragraph (e), includes a person, whether resident or non-resident, who, in connection with the employment or service of an employee of the employer,—
                                            1. provides accommodation for the employee at a distant workplace; or
                                              1. pays an amount for the employee's accommodation at a distant workplace:
                                              2. in sections CW 16B to CW 16F, CZ 23B, and CZ 29 to CZ 30, includes a company that is part of the same group of companies as the employer.

                                                1. For the treatment of PAYE income payments made to a cross-border employee who undertakes employment services in New Zealand, see section CE 1F.

                                                2. For the purposes of subsection (2), the Governor-General may by Order in Council make regulations to add to the types of accommodation that are excluded by paragraph (b) of the definition of accommodation from the rules relating to accommodation provided in connection with employment.

                                                3. An Order in Council under subsection (4) may—

                                                4. come into force on a date that is not earlier than 1 April 2015:
                                                  1. apply for income years that do not precede the 2015–16 income year.

                                                    1. An Order in Council under subsection (4)—

                                                    2. is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements); but
                                                      1. commences in accordance with subsection (5), even if it is not yet published.

                                                        Compare
                                                        Notes
                                                        • Section CE 1(1) heading: inserted (with effect on 1 April 2008), on , by section 24(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                                        • Section CE 1(1)(bb): inserted, on , by section 14(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(1)(c): repealed (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 30(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                                                        • Section CE 1(1)(d): amended, on , by section 17(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1(1B) heading: repealed, on , pursuant to section 14(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(1B): repealed, on , by section 14(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(1C) heading: inserted, on , by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1(1C): inserted, on , by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1(1D) heading: inserted, on , by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1(1D): inserted, on , by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1(2) heading: added (with effect on 1 April 2008), on , by section 24(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                                        • Section CE 1(2): replaced, on , by section 14(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(2): amended (with effect on 8 January 2023), on , by section 16(1) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                                        • Section CE 1(3) heading: inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(3): inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(3)(a): amended (with effect on 8 January 2023), on , by section 16(2) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                                        • Section CE 1(3)(b): amended (with effect on 8 January 2023), on , by section 16(3) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                                        • Section CE 1(3B) heading: inserted, on , by section 17(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1(3B): replaced, on , by section 16(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                                        • Section CE 1(4) heading: inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(4): inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(5) heading: inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(5): inserted, on , by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                                                        • Section CE 1(6) heading: inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
                                                        • Section CE 1(6): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
                                                        • Section CE 1 list of defined terms accommodation: inserted (with effect on 1 April 2008), on , by section 24(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                                        • Section CE 1 list of defined terms cross-border employee: inserted, on , by section 16(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                                        • Section CE 1 list of defined terms employee share scheme: inserted, on , by section 17(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms employer: inserted, on , by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms employment income information: inserted, on , by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms income year: inserted, on , by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1 list of defined terms New Zealand: inserted, on , by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms non-resident: inserted, on , by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms payday: inserted, on , by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1 list of defined terms PAYE income payment: inserted, on , by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms PAYE-related overpayment: inserted, on , by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                                        • Section CE 1 list of defined terms share purchase agreement: repealed, on , by section 17(3)(c) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                        • Section CE 1 list of defined terms unrepaid PAYE income overpayment: inserted, on , by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).