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:
- venue hire
- food and drink
- entertainment
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).
Charity at
Christmas
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.
Paperwork
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:
- There is no guarantee of work on a specific day.
- The amount of work they’ll get will fluctuate.
- How you’ll let them know when you would like them to work.
- They’re not obliged to make themselves available for work if asked.
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).
Time off
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:
- it's their main home.
- they inherited the property.
- they receive a property as part of a relationship settlement
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
