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Income Tax Act 2007

Income - Employee or contractor income

CE 1C: Exception: overseas accommodation

You could also call this:

“Tax rules for employer-provided overseas accommodation”

When you work overseas and your employer provides you with a place to live near your work, the value of this accommodation is treated differently for tax purposes. Instead of using the actual cost of your overseas accommodation, the tax rules use a value based on similar housing in New Zealand.

To figure out this value, you need to think about where you would likely work if you were in New Zealand, what kind of place you would live in, and how much it would typically cost to rent such a place in that area. The value used for tax purposes will be based on the average or middle price of similar rentals in that New Zealand location.

However, if the real cost of your overseas accommodation is less than what it would cost in New Zealand, you can use the lower overseas value instead.

If it’s not clear where in New Zealand you would work, the tax rules will use either the average or middle rental price for the whole country.

This rule also applies when your employer gives you money to pay for your accommodation overseas. The amount can be either what you actually spend on housing or a fair estimate of what you’re likely to spend.

These rules are explained in more detail in section CE 1B of the Income Tax Act 2007.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6439713.

Topics:
Money and consumer rights > Taxes
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Part C Income
Employee or contractor income

CE 1CException: overseas accommodation

  1. Despite section CE 1B, if accommodation is provided at or near a work location that is overseas, the value of the accommodation is an amount equal to the relevant market rental value of accommodation in New Zealand. The relevant market rental value is determined taking into account—

  2. the location where the person would be likely to work for their employer in New Zealand; and
    1. the equivalent accommodation in New Zealand that the person would be likely to occupy; and
      1. the average or median market rental value in the vicinity of the location referred to in paragraph (a).

        1. For the purposes of subsection (1), the provision of accommodation at or near an overseas work location includes an accommodation allowance or an amount paid for or towards the provision of the accommodation when the amount of the allowance or payment is—

        2. the actual cost to the employee for the accommodation; or
          1. a reasonable estimate of the expenditure that is likely to be incurred by the employee, or group of employees, for whom the amount is payable.

            1. For the purposes of subsection (1), if the value of the accommodation in the overseas location is less than the New Zealand equivalent market rental value, the value that must be used is the value in the overseas location.

            2. For the purposes of subsection (1)(a), if the location where the person would be likely to work for their employer in New Zealand is uncertain, the relevant market rental value is taken as either the average market rental value or the median market rental value, as applicable, for the whole of New Zealand.

            Notes
            • Section CE 1C: inserted, on , by section 15 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
            • Section CE 1C(1): amended (with effect on 1 April 2015), on , by section 76(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
            • Section CE 1C(1B) heading: inserted (with effect on 1 April 2015), on , by section 76(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
            • Section CE 1C(1B): inserted (with effect on 1 April 2015), on , by section 76(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).