If any of the work in your business requires some travel, chances are your employees will need to regularly claim expenses. However, you may not have a policy in place to manage expense reimbursements, especially if you’re starting out. To ensure everyone is on the same page, it can help to have the rules in writing. 

We developed an expense reimbursement policy template to make things easier for you. It’s made to suit all types of New Zealand businesses, from start-ups to SMEs. In the template, you’ll find:

• Sections outlining the policy’s purpose and scope.
• Sections outlining allowable and non-allowable expenses.
• How to claim expenses, including the processes around mileage and cash advances.
• What happens if there are any fraud or policy breaches.
• How often the policy will be reviewed.

Download the template by filling in the form on the right. 

How to use this policy template

To use our expense reimbursement policy template, all you need to do is download it, customise it to suit your business’s needs and roll it out. Whether you’re handling a lot of expense reimbursement requests each day, or only a few a year, the policy is designed to standardise the process. 

Once you’ve finalised the policy, we recommend holding a session where your workforce can ask questions and seek clarification about what the policy covers and what’s not covered. We also recommend integrating the policy into your onboarding process. 

What expenses are legitimate?

According to the Inland Revenue Department (IRD) there are various expenses that you can reimburse your employees for. These include: 

• Work-related travel and accommodation
• Meals while travelling for business
• Pre-approved client entertainment
• Fees for training or conferences (where pre-approved)
• Purchase of office supplies needed for your role
• Mileage for use of a personal vehicle on approved business travel, using Inland Revenue rates 

There are also illegitimate expenses that employees may try to claim, but are not considered reimbursable. These include:

• Alcoholic beverages (unless pre-approved)
• Fines or penalties of any kind
• Personal or family expenses
• Travel or meal upgrades (unless pre-approved)
• Expenses without a valid receipt
• Loyalty points or rewards kept for personal use

Are there any limits employers can impose?

As an employer, you can choose to set financial caps, daily allowances or approval requirements for expense reimbursement. These restrictions could include limiting how much money an employee can spend on an individual expense, or specifying which companies can be used for travel or accommodation. 

In every instance, you should clearly communicate these limits to your employees, as well as those responsible for approving expense reimbursements. In our policy template, we’ve created a section where you can outline when your employees require pre-approval before actioning an expense. 

What to include on an expense reimbursement form

Your expense reimbursement form will require a few fields to make it compliant with rules and regulations. Your claim form should include:

• Employee details
• Date of expense
• Type of expense
• The cost of the expense
• A space to attach a receipt and any other relevant evidence
• The purpose of the expense
• A section for manager approval

Record-keeping is a must for compliance and payroll. By developing your own expense reimbursement form, you can ensure it meets your business’s particular needs and requirements. 

During the development of the form, you should look to get buy-in from your employees (and any relevant stakeholders within management) to ensure everyone understands how to use it.

Setting clear timelines for reimbursement

While there are no regulations around when you should reimburse employees, as part of your policy, you should include clear guidelines around request deadlines and when you’ll reimburse your employees. This way, everyone knows when to expect payment, rather than having to follow-up.

For example, you may request that employees submit their claim forms within 30 days of incurring the expense. There should also be clear consequences of late submission, including delayed payment, and in the most extreme cases, non-reimbursement.

As the employer, you should also commit to paying your employees back in a timely manner. It’s likely easiest for you and your business to align reimbursements with pay cycles, as you can add the reimbursement to your employee’s salary or wages. You could also outline whether they will be paid as a lump sum along with their salary or wages, or via a separate bank transfer.

Finally, you should have plans for if a payment is delayed or disputed. If there are payment delays, the manager involved in the approvals process should proactively communicate the delay with the employee. Rather than leaving them in the dark, this encourages transparency around the process — which ultimately keeps the employment relationship positive.

How should employers manage tax on reimbursed expenses?

According to IRD, reimbursement for expenses is not taxable. Direct reimbursements for large business-arranged items, such as flights or hotel bookings, are generally not taxable either. However, if you pay them an amount more than the cost of the accrued expenses, then the excess is taxable. 

To reimburse the employee, you can add the amount of tax-free allowance to their net salary or wages (after PAYE) during your next pay run. You must clearly record the total tax-free allowance paid to an employee in your wage book, according to the IRD. The IRD also states that the tax-free reimbursement amount must not be shown on the employment information schedule submitted to them.

Instead of regularly reimbursing an employee for a particular cost, you may choose to provide them with a regular allowance. 

What records should employers keep for compliance?

Under the Employment Relations Act and IRD requirements, you must keep records related to expense reimbursement for at least seven years. You’ll need to keep things like written evidence of expenses (e.g. receipts or invoices), relevant claim forms and approval logs. If exact receipts are unavailable, the IRD notes that employers can calculate reimbursement allowances based on reasonable estimates or average costs. 

A receipt that is suitable for expense reimbursement will need to include a few bits of information. Those are:

• The supplier’s name
• The cost of the expense
• The nature of the goods or service provided
• The date of the expense
• The date the receipt was created

As part of your record-keeping, you may require employees to submit both physical and digital receipts, though this depends on what suits your business best.

Best practices for expense management in small businesses

If you’re a small business that doesn’t have an expense management process yet, then that’s OK! 

However, as you grow, it’s worth setting up the right processes and procedures that can scale with you. It doesn’t have to be scary – reimbursements can empower your employees to win over new clients, or go the extra mile if they need to.

As a start, we’d recommend looking into payroll software with an expense management function. This can help you with keeping records, and also make it easy for employees to claim their expenses. 

You can also use Optical Character Recognition (OCR) technology to automate the extraction of transaction details from photos of receipts, saving employees time. Syncing these tools with accounting integrations like Xero or QuickBooks automatically transfers transactions between expense platforms and accounting software to reduce manual data entry discrepancies.

Then, make sure you establish what documentation is required for expense reimbursement and set up approval workflows. We’d encourage mandating upfront approval for larger costs too, so you don’t get caught out. 

Finally, once you’re up and running, make sure you regularly audit your expenses, so you can see where your business’s money is going. 

Need an expense reimbursement policy?

Save time, manage compliance, and provide transparency between yourself and your employees with our easy-to-use expense reimbursement policy template. 

With the right expense reimbursement policy, you can provide your workforce with a better understanding of what expenses you’ll reimburse, and what’s not covered.

Download our policy template by filling in the form on the right.

The information in this article is current as at 30 October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.