The Government has added additional measures to the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) (the “Bill”) focussed on providing tax relief for individuals and business impacted by the North Island weather events in January and February. (This captures the impacts of Cyclone Hale between 8-12 January, the flooding events of 26 January to 3 February and Cyclone Gabrielle between 12-16 February for those in the affected areas.) 

The measures, included in a Supplementary Order Paper (“SOP”) to the Bill:

  • Allow employer-provided accommodation to employees relocating to the affected areas to assist with the rebuild and recovery (as part of a project of limited duration) to be provided tax-free for a period of up to 5 years. There is also the ability for a further extension of this time period by Order in Council (Government Regulation).
  • Allow employers to provide temporary tax-free accommodation support payments to affected employees.
  • Allow cash and quantifiable non-cash benefits (other than accommodation – see above) totalling up to $5,000 to be paid to an affected employee without adverse tax consequences. (That is, without the employer having to deduct PAYE or FBT, depending on the type of benefit). Note: both this and the temporary accommodation support measures are subject to certain qualification requirements, including: the amounts not being paid as part of a salary sacrifice-type arrangement, being genuinely provided for relief purposes, and paid in the 8 week period from the first day of the relevant North Island weather event.
  • Confirms the extension of tax deductibility for donated trading stock to 31 March 2024 (the Bill corrects an omission in the Regulation that extended this treatment in late February.)

The SOP also includes a number of remedial amendments to items in the Bill, to give effect to the recommendations in the Finance and Expenditure Committee’s report back.

As noted in our taxmail on the Bill report back (available here), we were expecting a range of Cyclone/flooding-related tax relief measures to be released shortly. We welcome these amendments, which should give clarity to business on the treatment of welfare payments (and other support) provided to employees and others during a difficult time. The measures are largely modelled on those introduced in response to the Canterbury and Kaikoura earthquakes.

While the Government did signal early on it was working on a support package, including tax measures, there was little detail on the actual content. As a result, some welfare payments will have already been made with tax deducted (as employers will have taken a position based on the tax law at the time). As currently drafted, these payments will not get the benefit of these measures (the SOP wording requires the employer to have treated the payment as exempt income). In our view, employers and employees should not be adversely impacted where employers have done the right thing and responded to their employees’ needs at the time.


Following the release of taxmail, Inland Revenue has confirmed that welfare payments already made will also receive the benefit of the proposed exemptions. This is a welcome change. We understand that employers will be able to make adjustments as part of future employee income reporting for payments previously reported as taxable. Further Inland Revenue operational guidance on this is expected shortly.  

What’s missing from the SOP?

Depreciation rollover relief for irreparably damaged property and greater clarity on the tax treatment of certain insurance proceeds and other business support payments, to name a couple.

We understand these, and other, issues are still being worked through for future introduction as part of a 2023 Tax Bill. There is the need for some haste however as there will be practical consequences for those affected. For example, March balance date businesses will need to take a view on depreciation recovery income and the treatment of any pay-outs received for May provisional tax calculations.

Therefore, we strongly urge Officials and the Government to make announcements on these outstanding matters as soon as possible to give certainty to affected taxpayers.  

FBT exemption for self and low powered vehicles (e.g. e-bikes and scooters)

In a late-breaking (and surprising) addition to the Bill, a new SOP introduces an FBT exemption for employer provided bicycles, e-bikes, scooters and mobility devices (that are not motor vehicles).

The Finance and Expenditure Committee received a number of submissions that these alternative forms of transport should also be included alongside the proposed FBT exemption for employer subsidised public transport fares. However, the Committee rejected those submissions in its report-back on the Bill. It appears the Government has reconsidered those submissions and decided they have merit.