CW 17 Expenditure on account, and reimbursement, of employees
Exempt income: expenditure on account

(1)

Expenditure on account of an employee, being a payment to which section CE 5 (Meaning of expenditure on account of an employee) applies, that is incurred by an employer in connection with the employee’s employment or service is exempt income of the employee to the extent to which the expenditure is expenditure for which the employee would be allowed a deduction if they incurred the expenditure and if the employment limitation did not exist.

Exempt income: reimbursement

(2)

An amount that an employer pays to an employee in connection with the employee’s employment or service is exempt income of the employee to the extent to which it reimburses the employee for expenditure for which the employee would be allowed a deduction if the employment limitation did not exist.

Requirements for expenditure connected to employment or service

(2B)

For the purposes of subsections (1) and (2), expenditure is treated as incurred, or an amount paid, in connection with an employee’s employment or service only if—

(a)

the expenditure is incurred or the amount is paid because the employee is performing an obligation required by their employment or service; and

(b)

the employee derives employment income through the performance of the obligation; and

(c)

the expenditure is necessary in the performance of the obligation.

When subsection (2D) applies

(2C)

Subsection (2D) applies for the purposes of subsections (2) and (3) to an amount that an employer pays to or on behalf of an employee in connection with their employment or service when—

(a)

the payment—

(i)

is made to, or on behalf of, a wide group or class of employees; and

(ii)

is provided mainly to reimburse an expense incurred by an employee in deriving their employment income; and

(b)

the amount paid is not an amount incurred by the employer when, under the terms of their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the amount; and

(c)

the Commissioner considers that the average private or capital benefit that the employee as a member of the group or class is likely to receive from the payment is hard to measure.

Determinations

(2D)

The Commissioner may make a determination under section 91AAT of the Tax Administration Act 1994 as to whether, or the extent to which, tax must be paid on some or all of the amount.

Estimated expenditure of employees

(3)

For the purposes of subsection (2),—

(a)

the employer may make, for a relevant period, a reasonable estimate of the amount of expenditure likely to be incurred by the employee or a group of employees for which reimbursement is payable; and

(b)

the amount estimated is treated as if it were the amount incurred during the period to which the estimate relates.

Depreciation loss included

(4)

In this section, expenditure includes an amount of depreciation loss.

Relationship with certain employment expenses provisions

(5)

This section does not apply to an amount referred to in section CW 16B to CW 16F, CW 17B, CW 17C, CW 17CB, CW 17CC, or CW 18 (which relate to certain amounts of employment expenditure).

Defined in this Act: amount, Commissioner, deduction, depreciation loss, employee, employer, employment, employment income, employment limitation, exempt income, expenditure on account of an employee, pay, tax

Compare: 2004 No 35 s CW 13

Section CW 17(1): amended (with effect on 1 April 2008), on 2 November 2012 (applying for the 2008–09 and later income years), by section 16(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CW 17(2B) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(2B): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(2C) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(2C): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(2D) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(2D): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(4) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CW 17(4): added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CW 17(5) heading: replaced, on 1 April 2015, by section 25(2)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17(5): added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CW 17(5): amended, on 1 April 2015, by section 25(2)(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17 list of defined terms Commissioner: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17 list of defined terms depreciation loss: inserted (with effect on 1 April 2008), on 6 October 2009, by section 44(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CW 17 list of defined terms employment: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17 list of defined terms employment income: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section CW 17 list of defined terms tax: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).