CHRISTMAS 2017
SEASON’S GREETINGS!
This is our last newsletter for the year. We know you are probably busier than ever so we will keep it short.
Are you still tacking up the tinsel while thinking about everything on your to-do list? Do you have all your reindeer in a row or is your sleigh skidding into the silly season? Check your cashflow to make sure the business is in good shape for December and January tax dates.
Wishing you a safe and happy Christmas and a prosperous new year!
Our office will close on the 22nd of December and reopen in the New Year on the 15th of January. For any urgent matters, a skeleton crew will be at the office from Monday 8th January. Thank you for all your support this year.
DON’T LEAVE IT LATE – GET TAX SORTED BEFORE CHRISTMAS
Provisional tax and GST are due on 15 January.
The timing of these payments isn’t ideal as many of you will be indulging in the delights a summer break offers.
But it’s important that you don’t neglect your tax obligations – especially as Inland Revenue will charge 8.22 percent interest and late payment penalties if you don’t pay the tax you are required to pay on time.
PRESENTS AND PARTIES
Are you planning a Christmas event for your clients? Is gift-giving on your to-do list?
Take a minute to refresh yourself on what is deductible as a business related expense.
PRESENTS
Are you thinking of gifts for clients, business associates or team members?
If gifts consist of food or drink, you can only claim 50% of the expense as a tax deduction. If gift baskets or hampers contain some food or drink and some other goodies, the food or drink items are 50% deductible but the other gift items are 100% deductible.
Note that when you claim the tax deduction, you need to apportion the expense between the 100% deductible items and the 50% deductible items. Let us know the details.
PARTIES
The basics: an expense is business-related if you spend the money to help your business earn income. Business-related expenses are generally fully deductible. If the expense does not help your business earn gross income, it is a private expense, not claimable as a deduction. Purely promotional events put your brand out there and are a marketing expense for the business. But entertainment events such as Christmas parties inhabit a grey area sometimes.
You will need to make a GST adjustment for any entertainment expenses which are 50% deductible. This will be required when your income tax return is filed. We can help you with this.
Are you planning a promotional event open to the general public? Sponsoring the local Santa parade?
The event will be 100% deductible as a business expense. However, if the event is not open to the public, but by invitation to customers, business associates or team members, you can only deduct 50% of the costs.
Are you planning an event for charity? A Christmas party at the local hospital? Serving Christmas dinner at the local homeless shelter? Entertainment supplied for charity is 100% deductible.
Are you celebrating a spectacular year and taking your team to Raro for a weekend?
Entertainment enjoyed outside New Zealand is 100% deductible. However, if your team contributes to costs (for airfares or anything else), make a note to reduce your expense claim by the amount of the contribution.
BUSINESS HEALTH CHECK
THINGS TO DO THIS MONTH
- Check your cashflow and tax position
- Get together with your team to make sure you cover everything needed if your business is closing over Christmas. Review your worksite and equipment for safety and security. Back up your client and financial data on all IT systems and run any anti-virus updates.
- Let clients and suppliers know your closedown details or limited opening hours. Consider whether your office or website needs signage giving a contact number if the office will be unattended. Keep it general as you don’t want to flag too good an opportunity for thieves.
PAYING STAFF OVER THE HOLIDAYS
When there’s a public holiday on a day your employee usually works, they’re entitled to a paid day off — no matter how long they’ve worked for you.
You can only require employees to work a public holiday if it’s written in their employment agreements. Also, if they agree to work, you must:
- pay them at least time and a half
- give them another paid day off later
Mondayisation
When a public holiday falls on a Saturday or Sunday, employees who don’t normally work then get the following Monday as their paid public holiday — this is called Mondayisation.
The public holidays for the upcoming Christmas break, with the day of the week they fall on, are as follows:
Christmas Day — Monday, 25 December 2017
Boxing Day — Tuesday, 26 December 2017
New Year’s Day — Monday, 1 January 2018
Day after New Year’s Day — Tuesday, 2 January 2018
An employee is entitled to a full alternative day off if they work on a public holiday — no matter how many hours they worked that day.
But they don’t get an alternative day off — also called a day in lieu — if:
CLAIMING EXPENSES WHEN AWAY ON BUSINESS
You can claim for lots of daily expenses when you’re travelling for work. If you take a holiday as part of the same trip, you can only claim for the parts of the trip that were work-related.
What you can claim
In general, when you’re away from home you can claim for:
- flights
- taxis, or mileage if you use your own car for business travel
- accommodation
- meals and snacks
Accommodation
If you’re attending a work-related meeting, conference or training course that requires an overnight stay, you can claim the cost of accommodation, eg hotel, motel or short-term rental.
If an employee is working away from home for an extended period, eg on secondment, you can claim for accommodation, or any accommodation allowance you pay, as long as they won’t be gone for more than two years (or three years for capital projects).
Food and drink
If you or one of your employees buys a meal while travelling on business, the cost is 100% deductible.
But you can only deduct 50% of the cost of food and drink if either:
- The trip is mainly for the purpose of enjoying entertainment, eg a team bonding trip
- The meal or function involves an existing or potential business contact as a guest
- A celebration where you won’t be working, eg a reception, or a staff Christmas party
You or your employees can also claim for snacks and refreshments, eg tea and coffee, while they’re away if you normally provide these refreshments at work
Entertainment
On a work trip, you can claim the cost of entertainment if its purpose was to:
- build up business contacts, eg taking a potential client out for dinner
- keep your employees happy, eg providing tickets to a show
- promote your goods or services, eg offering food to entice customers to a stall at an expo
If the entertainment is helping you earn your income, it’s usually deductible when it’s time to work out your tax.
Within New Zealand, entertainment expenses can be either 50% or 100% claimable — check with Inland Revenue.
If you’re travelling overseas, you can claim 100% of work-related entertainment expenses.
IMPORTANT PAYMENT DATES TO REMEMBER
December 20th 2017
- PAYE – Small employers return and payment
- PAYE – Large employers return and payment
January 15th 2018
- PAYE – Large employers returns and payments
- Provisional Tax – Instalment due
- GST – Return and payment due for November
January 22nd 2018
- PAYE – Small employers return and payment
- PAYE – Large employers return and payment
- FBT – Third Quarter return and payment due
- RWT – RWT return and payment due for December
- NRWT / Approved Issuer Levy – Payment and return for December
January 29th 2018
- GST – Return and payment due for December
In warm appreciation of our association during the past year, we extend our very best wishes for a happy holiday season.
Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this newsletter; always see your professional advisor before taking any action that you are unsure about.