Relocation Packages NZ
A relocation package sounds like a bonus attached to a job offer. It is not, and treating it as one is how people end up thousands of dollars short. The tax treatment turns entirely on how the money is structured, and the structure is set by the employer long before you see the offer letter.
Get it right and the employer can cover the move without a cent of tax on either side. Get it wrong and the same amount arrives as taxable salary, with a third of it gone before the removal van is booked.
The three things to remember
A payment is exempt only if it reimburses actual eligible expenses. The expense must be on the Commissioner's list in DET 09/04. And your old home must be a substantial travelling distance from the new workplace.
The most common structure is also the worst one for you. An employer who offers "a $5,000 relocation allowance" paid with your first salary is paying you $5,000 of taxable income, because nothing about it reimburses a receipted eligible expense. Ask instead for reimbursement of actual costs against receipts, up to a cap. The employer's total outlay is similar; what changes is how much of it survives to pay the movers.
The three conditions
The distance test sits alongside these: relocation expenses are generally only tax free where the old home is a substantial travelling distance from the new workplace. Moving across a city to shorten a commute you already had does not usually qualify.
Who counts as coming with you
The exemption covers relocating your household, not only yourself. Immediate family for this purpose includes your partner, dependent children, and dependent adults who are part of your household.
That last category is broader than people expect. A dependent parent, or a disabled relative for whom you or your partner are the caregiver, can be included. If you are moving a household that includes someone in that position, their costs may be covered too, and it is worth raising rather than assuming.
DET 09/04 sets out the categories that qualify. Rather than arguing about a specific cost after the fact, look at the determination before you agree the package and shape the request around what is actually on it. An employer is usually indifferent between two items of similar cost, so choosing the eligible one is free money for you.
What the structure is worth
Compare two offers that cost the employer the same.
Neither offer costs the employer more, which is what makes this negotiable. You are not asking for extra money, only for the same money in a form that is not taxed.
What to negotiate beyond the money
| Item | Why it matters |
|---|---|
| Temporary accommodation, and for how long | Finding a home in an unfamiliar market takes longer than people plan for |
| Storage between properties | Rarely offered and frequently needed |
| A house-hunting trip before the move | Cheaper than a bad rental chosen from photographs |
| Pets and vehicles | Both cost more to move than people expect, especially between islands |
| A start date with room in it | Moving and starting a job in the same week goes badly |
| Partner job search support | The second career is the usual reason a relocation fails |
Repayment clauses
Many packages require repayment if you leave within a period, often one or two years, sometimes on a sliding scale. That is a legitimate term and a common one, but read it closely.
These clauses share a lot with training bonds, and the same principles apply to whether they are enforceable. What matters is that the amount is a genuine pre-estimate of the employer's loss rather than a penalty.
Moving from overseas
An international relocation adds several things at once. Visa and immigration costs, shipping a container rather than a truck, quarantine for pets, and the currency conversion on whatever savings you bring.
The currency piece is usually the largest and the least discussed. On a $150,000 transfer a 1% margin costs $1,500, which is more than most people spend on the entire physical move. Compare on the all-in rate rather than the advertised fee.
If you are returning to New Zealand after ten years away, the tax position is bigger than the relocation package: see the returning Kiwi money checklist for the transitional resident exemption and the choice it forces against Working for Families.
A relocation package agreed in an email during recruitment, and not repeated in the signed agreement, is a promise you may struggle to enforce once the hiring manager has moved on. Ask for it in the agreement itself, with the figures, the eligible categories, and any repayment clause spelled out.
What this guide does not cover
Fringe benefit tax on non-cash benefits an employer provides is a separate subject with its own rules. Employer-provided accommodation on an ongoing basis, as distinct from temporary accommodation during a move, is treated differently again. Immigration requirements and visa costs sit outside tax entirely. This is general information rather than tax advice, and the specific list in DET 09/04 should be read directly before a package is agreed.
Related guides and tools
- Moving out costs guide, for what a move actually costs before any reimbursement.
- Employment settlements and tax guide, for how other lump sums from an employer are taxed.
- Reading your employment agreement guide, for the repayment clause that usually sits alongside relocation.
- Working remotely for an overseas employer guide, for when the job moves but you do not.
Test Your Knowledge
Ten questions on moving for work.
Sources: Inland Revenue on relocation expenses allowances, determination DET 09/04 on eligible relocation expenses, and the Tax Technical commentary on the tax treatment of payments for relocation and certain other allowances. Read DET 09/04 directly before agreeing a package, as only listed categories qualify.