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Tax on Christmas Parties and Presents
Casual Workers- Filling Gaps at Short Notice
Bright Line Property Rule
The Office will be closed from Friday 27/11/2015- reopen Monday 14/12/2015.
TAX ON CHRISTMAS PARTIES AND PRESENTS
It’s coming up to that time of year when you might be planning a staff Christmas party. What are the tax considerations?
You may be able to claim as business expenses events such as Christmas functions or giving gifts to employees. However, you may not be able to claim all of the costs.
You may be able to claim 50% of your party expenses in your GST and income tax returns if the expenses are related to your business. But there’s also a significant private element. Party expenses you can claim 50% of can include:
You can generally claim 100% of the cost of gifts to staff and clients, such as food baskets or event tickets, as a business expense. If you provide other types of goodies, like accommodation in a holiday home, use of a corporate yacht or lunch at a restaurant, then these come under entertainment expenses – and are 50% deductible as long as they’re business expenses.
Business entertainment rules are outlined in the IRDs Entertainment Expenses Guide (IR268).
Are you thinking about some Christmas charity? You can deduct 100% of the cost of entertainment you give to the general public for charitable purposes. For example, if your company donates food for a Christmas party at a children’s hospital, that expense is 100% deductible.
With the summer holidays approaching, you may have to consider employing casual workers to fill staffing gaps. Also, unexpected events, such as a staff member calling in sick, can potentially derail your business day. So having casual staff available is very useful. But tread carefully – if you treat casual workers like part-time staff, e.g. give them regular hours, this is a breach of employment law. Casual work is intermittent or irregular, and casual employees don’t have to accept every offer of work you make. To make sure you know the difference between casuals and part-timers, check out Business.govt.nz’s Visual Guide to Employee Types.
Just like the rest of your employees, people who work casually for you need an employment agreement. MBIE’s online Employment Agreement Builder can guide you through the process.
The casual agreement should make it clear:
Don’t get them confused with part-time workers – if the work is in a regular pattern, they’re not casuals and should have a permanent part-time agreement.
As an employer, remember to keep records of the start and finish dates for workers, and make sure new staff complete a Tax Code Declaration Form (IR330).
Casual employees are entitled to holidays. Because they don’t have set hours, you can agree with them that instead of earning annual leave, you’ll pay them an extra 8% of their salary or wage each pay day. They’re also entitled to sick leave and bereavement leave after six months of starting work with you if they fulfil certain criteria regarding their hours. Holidays and Leave are explained on the Business.govt.nz website.
If you employ casual agricultural workers, then check out the Inland Revenue Website for information on how to tax their pay.
BRIGHT LINE PROPERTY RULE
The bright line rule Government proposed as part of Budget 2015 applied to residential property on or after 1 October 2015.
This means people who sell residential property within 2 years pf buying it pay income tax on the sale, unless:
People will continue to return property income in the "other income" Box in their Income Tax Returns, and will have to complete an IR833 Property Sale Information Form
IRD have a website page relating to the applicable property changes on www.ird.govt.nz/propertychanges
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