Reimbursing employees for work use of phones, tablets or laptops

If you provide employees with mobile phones, laptops, or devices for work, which are used solely for work, you can claim the devices and usage plans as business expenses.

Where employees who do not work from home use their own phones or devices for both work and private use, you may choose to reimburse them or provide reimbursing allowances for the business use portion of the devices and usage plans. The amount of a reimbursing allowance should be based on a reasonable estimate of the work expense.

Inland Revenue's guidelines for reimbursements for telecommunications tools, set out the extent they are taxable to the employee. Where the employee uses the device:

1. principally for work, employers can treat 75% of the amount paid as exempt income of the employee, either by reimbursement or a reimbursing allowance for usage plans. The extent to which the payment is taxable is 25%. If the employer reimburses 75% of the total bill, the amount paid is exempt.  

2. for work sometimes, but principally for private use, employers can treat 25% of the amount paid as exempt income of the employee. The extent to which the payment is taxable is 75%. If the employer reimburses 25% of the total bill, the amount paid is exempt.  

3. mainly for their own use with some minimal work use, the employer can treat payment up to $7 per week, amounting to no more than $364/year per employee, as exempt income of the employee.

Your reimbursements to employees may also allow for depreciation loss.

For employees who work from home, further tax-exempt reimbursement may be allowable (including a de minimis option amount of $27 per week) as well as tax-exempt allowances for furniture and other equipment used for work.

Please contact us if you would like more information or help calculating allowances and depreciation.