Accommodation Allowances

If your employee receives accommodation provided by you as part of their employment, it will need to be accounted for in their pay so that it is taxed correctly. This can be managed by adding an allowance and deduction component to your employee's Default Pay.

You can do this from People > Employees, by selecting the relevant employee and clicking on their Default Pay tab.

Under earnings include the Accommodation Allowance pay item* and specify the value of their accommodation under the Rate field.

Under deductions add the Accommodation Deduction pay item* and specify the same Rate.

Effect on Leave Rates

The Holidays Act 2003 (sections 8(1)(b)(iii) and 10) specifies that the "cash value of board or lodgings" is included in gross earnings for leave calculations. That means that when an employee takes leave that is paid out at rates calculated using gross earnings, paying the accommodation allowance as well could result in double-dipping. The payment of the accommodation allowance has been built into the leave rate so to pay the standard accommodation allowance essentially means the employee is being paid the accommodation allowance twice for the leave days.

In these situations, it is worth considering reducing the accommodation allowance by editing the amount in the pay. 

* If your account was created prior to June 1st 2021 your account may not contain these pay items. Please get in touch with PayHero Support at support@payhero.co.nz so that we can add them to your account for you. Creating these pay items yourself may result in incorrect KiwiSaver deductions.