Accommodation Provided to Employees

If you employ staff and provide staff with accommodation, you are required to add the market value of the rent/benefit being provided to their gross income and deduct PAYE tax from this.  The rent amount is then deducted from net pay before physically paying the staff member.

For Example:
John & Sally employ James to work on their Otorohanga dairy farm and as part of his employment they provide him with a house to live in. James is to be paid an annual salary of $52,000 and the market rent for their house is $150 per week. James is not a Kiwisaver member.  The calculation for James’ weekly net pay would be as follows:

Gross Income- $1,000.00
Add Rent - $150.00
Total Gross - $1,150.00
Less PAYE - $227.44
Less Rent - $-150.00
NET PAYMENT - $  772.56

This requirement does not include houses provided to sharemilkers as they are contractors.  However, if you are a sharemilker operating through a company structure, it is the company that is providing the accommodation benefit to the shareholder employee and the company will be required to account for tax on the accommodation provided.