TOTALACCOUNTING Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

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Welcome again to the TotalAccounting Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  



We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.



Here's wishing you a very happy Xmas and New Year and a very good and successful 2015.  Thank you once again for your service in 2014.



The Office will be closed from Thursday 25/12/2014- Monday 12/1/2015.  If you need to leave messages of contact please ring the office number and leave an answerhone message.. These will be returned when the Office reopens.



  1. Employing Summer Staff

  2. Tax on Christmas Presents and Parties 



Whether you’re in hospitality, retail, horticulture or tourism, casual staff will be required over the busy summer months. But even if you are only employing someone for a few weeks, you still have obligations as an employer, and they still have rights as an employee. 

The low-down on Casual Staff

Casual workers are employees who work only when required, with intermittent or irregular work patterns. They don’t have any guaranteed hours or income. Casual workers are usually hired for one-off business needs or ongoing, irregular work. For example, a retail store may need extra help over the Christmas period.  Casual employees have the same employment rights and entitlements as all other full-time New Zealand workers. This means they need an employment agreement and are entitled to holiday pay and leave allowances. Read more on employing casual staff.

Getting the Basics Right

Every employee has minimum employment rights to ensure they are treated fairly and can work safely. These cover things like employment agreements, health and safety, minimum wages, rest and meal breaks, holiday pay, and annual, sick and bereavement leave.  There’s more about minimum employment rights.

Minimum Wage Rates

The adult minimum wage rate (before tax) that applies for employees aged 16 or over is $14.25 an hour, which is:  

  • $114.00 for an 8-hour day or
  • $570.00 for a 40-hour week or
  • $1,140 for an 80-hour fortnight.

The minimum rate that applies to starting-out workers and employees on the training minimum wage (before tax), is $11.40 an hour, which is:  

  • $91.20 for an 8-hour day or
  • $456.00 for a 40-hour week or
  • $912 for an 80-hour fortnight.

Employees have to be paid at least the minimum hourly wage rate for any extra time worked over eight hours a day, or over 40 hours a week or 80 hours a fortnight. There is no minimum wage for children under 16, but all other employment conditions apply.

Read more about  the minimum wage

Paying Tax for Casual Staff

Even if your new employees will only be working for you for a short time, you still need to make sure they fill out a tax code declaration (IR330). You’ll also need to make sure that when they start and finish working for you, you show their start and/or finish dates on the employer monthly schedule (IR 348).  Depending on your industry, there may be special requirements when hiring casual workers, such as agricultural workers.

Read more about  special types of workers on the IRD Website.

Employment Agreements

It’s the law to have a written employment agreement for all staff. A clear, written employment agreement ensures employees know what you expect from them and what their duties are, and protects both of you.  

Make it easy with the employment agreement builder.

Paying Holiday Pay

Calculating and paying holiday pay is easy when you know what your obligations are, and  IRD has a calculator to help you work it out.

How to calculate Holiday Pay

Holiday pay is pay for an employee's annual leave and pay for statutory holidays. You need to include holiday pay as earnings in the period you pay your employee. If you don't have a payroll package or a payroll provider, there are two ways you can work it out:

  • Use your employee's annual entitlement. Currently, employees are entitled to a minimum of four weeks annual leave after being employed by you for a year.
  • Use 8% of your employee's gross earnings. You can only use this option if your employee: 
    • has a fixed-term employment agreement
    • is a casual employee
    • stops working for you and has only accrued part of their leave entitlement.

To work out how much tax to deduct from holiday pay use  IRD’s calculate tax on holiday pay calculator.

Cashing up Annual Leave

Your employees can ‘cash-up’ a maximum of one week of their annual leave if you both agree. Cashing up annual holidays can only happen at the employee’s request and it must be submitted to you in writing. Employees can request to cash-up less than a week, and more than one request can be made until a maximum of one week of annual leave is paid.

Once you have agreed to cash-up a portion of your employee's annual leave, you need to provide the payment as soon as possible, which will usually be the next pay day. The value of the payment must be at least the same as if the employee had taken the holidays.

Payroll Tips for Cashed up Leave

  • Cashed-up annual leave should be treated as an extra pay or unexpected bonus.
  • Because it’s treated as an extra pay, pay as you earn (PAYE) should be calculated using the rates for lump sum payments.
  • If your employee usually has student loan or KiwiSaver deductions made from their pay, deduct these from the cashed-up annual leave as well.
  • Your employee’s Cild Support liabilities and Working for Families Tax Credits entitlement may also need to be adjusted if their family income has changed.

Employers can’t encourage or pressure employees into cashing up leave. Likewise, cashing up can’t be raised in wage or salary negotiations or be a condition of employment. Requests to cash-up can’t be included in employment agreements, but an employment agreement can outline the process for making a request.

To find out more about your obligations as an employer or the Holidays Act, read  the Holidays and Leave booklet [PDF 1.9 MB] from the Ministry of Business Innovation and Employment.



If you’re holding a Christmas function or giving work gifts, you may be able to claim tax back.  If you don't hold a function but give your employees some sort of entertainment – like a voucher that they can use at any time – you may need to pay FBT (fringe benefit tax).  You can generally claim 50% of your party expenses in your GST and income tax returns.  Party expenses can include things like venue hire, food, drink and entertainment. You can generally claim 100% of the cost of gifts, such as food, wine or event tickets.

Tax Deductions on Gifts for Employees

If you give your employees a gift you can claim the full cost as an expense, as long as it doesn't fall within the business entertainment rules, but you may have to pay FBT. You won't have to pay FBT on the gift if it's less than the general employee exemption and maximum employer exemption.

If you file your FBT returns quarterly there's a $300 exemption per employee per quarter if you provide free goods, or subsidised or discounted goods and services. If the value of the benefit for an employee goes over $300 for a quarter, you must pay FBT on the full value of the benefit.

For example, Charlie and Sam are given gifts of mystery weekends. One is valued at $250 and the other $350. The $250 gift is not subject to FBT but the $350 gift is.

The maximum employer exemption you can claim is $22,500 per annum. If the total value of benefits for all employees goes over $22,500 for the current quarter and the three previous quarters, you must pay FBT on the total value of the benefits in the current quarter.

If you file annual or income year returns there's a yearly exemption of $1,200 for each employee, with the maximum employer exemption for all employees of $22,500 per year. If the period covered by the return is less or more than a normal income year, an adjustment per employee is needed as: (Days covered by return ÷ 365) × $1,200.

Tax Deductible Party and Entertainment Expenses

If you provide your employees, clients and suppliers, or prospective clients and suppliers, with any of the following items you can only deduct 50% of the cost because they're counted as ‘entertainment expenditure’.

Entertainment expenses that are 50% deductible include:

  • corporate boxes, corporate marquees or tents, and similar exclusive areas (whether permanent or temporary) at sporting, cultural or other recreational activities that take place away from your business premises, this includes tickets or other rights of entry
  • accommodation in a holiday home, time-share apartment or similar, but not accommodation incidental to business activities or employment duties
  • pleasure-crafts, such as a corporate yacht
  • food and drink provided or consumed
    • at any of the three types of entertainment above, such as alcohol and food provided in a corporate box
    • away from the taxpayer's place of business – like a business lunch at a restaurant
    • on the taxpayer's business premises at a party, reception, celebration meal, or other similar social function – like a Christmas party for all staff, held on the business premises
    • at any event or function, on or away from your business premises to build staff morale or goodwill, such as Friday drinks at the pub
    • in an area of the business premises reserved for use by senior staff, such as executive dining room for entertaining clients.

GST adjustments

If you claim a 50% deduction for a business entertainment expense you’ll have to make a GST adjustment so you're only claiming 50% of the GST, if you previously claimed 100%.





The information provided in this email newsletter is for informational purposes only.   TotalAccounting accepts no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The TotalAccounting email newsletter may be copied and distributed subject to the following conditions:
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