Q: We are working on Holiday Pay Calculations and note that employees have received the following:
- Travel Allowance
- Meal Allowance
- Education Allowance
- Tool Allowance
All the above sit under the Non-Taxable Section of the Payslip but are included in the Total Gross Earnings on the payslip vs Total Taxable Gross Earnings where they are not included – Note the payroll system used was an Australian Payroll Software for NZ-based employees.
A: You must determine whether they are actual reimbursements. How has the employee incurred an expense while working for their employer? If IRD came in, they would ask to be shown how these payments can be justifiably considered reimbursements.
If you cannot show this, then they would be taxable and cause all types of issues with taxes to pay and the impact on KiwiSaver and leave.