Accountants have welcomed a decision by Inland Revenue to extend tax relief for employers of remote workers facing extra costs.

But they say the provisions, which has been shifted until September, need to be more permanent to reflect the long-term trend of working from home.

The Government needed to ''bite the bullet and come up with a fair permanent solution,” according to John Cuthbertson, the New Zealand tax leader for Chartered Accountants Australia and New Zealand.

Inland Revenue has twice extended a tax provision to help employers contribute to out-of-pocket expenses of employees working from home.

It was due to end on March 17 but has now been moved six months to September 30.

Inland Revenue says it continues to work on the wider tax implications of reimbursing employees who work from home as a 'new way of working” but was not ready to make a public statement before March 17.

‘'This will allow further time for the commissioner to consider all matters relating to the tax consequences of employees working from home.''

John says that under pre-Covid rules, the tax system did not make it easy for employers to reimburse work from home costs.

"It got complicated, discouraging employers from helping their employees out,'' he says.

The old system required them to treat payments to employees as either a tax-free reimbursement of business costs, or a payment in the form of an additional benefit.

But working from home had now become the default setting for more and more Kiwis, and it was imposing a cost some workers could ill afford, Cuthbertson says.

'It is important to recognise that for many employers hit hard by the Covid-19 pandemic, reimbursing work from home costs is not an option. It's money many don't have.''

Chartered Accountants Australia and New Zealand believed any permanent solution needed to be practical, fair to workers, light on red tape and gave certainty of tax treatment to employers.

The provision allows employers to staff who were working from home because of the Covid pandemic up to $20 a week tax-free for expenses such as additional heating costs, without having to estimate or show what the employee's actual expenses were.

The change also permits a tax-free payment of up to $400 per employee for furniture costs without having to gather evidence on how the money was spent.

Previously, employers had only been allowed to make a $5-a-week tax-free payment to employees working from home, for phone expenses, before needing evidence of their expenses.

The extension in September removed the criteria that the employee had to be working from home as a result of the pandemic.

-Stuff/Catherine Harris