XMAS EXPENSES – TAX DEDUCTION GUIDE

Xmas Expenses – Tax Deduction Guide

Santa is coming and so are those Xmas time business expenses. Begs the question – What about the tax? Can you deduct all of it? Some of it? Ooooh – maybe none of it? Well, you have come to the right place to find out!

Keep the HO HO HO from becoming an OH NO with our handy tax deduction guide filled with tips to make your money work for you this festive season.

STAFF XMAS PARTY/ ENTERTAINMENT

Yes! You can claim your end of year celebrations as business expenses. However, you may not be able to claim all of the costs, and they may also be subject to fringe benefit tax (FBT). FBT is a tax paid on benefits that workers receive as a result of their employment. Party expenses you can claim 50% of can include: Venue hire, food and drink, entertainment, or accommodation.

A general guide of 50% deductible expenses:

  • Corporate boxes
  • Tickets to events
  • Hiring marquees and tents
  • Holiday homes and timeshare apartments (although you can claim a deduction of 100% if using the accommodation is secondary to the business activities or employment duties. Contact us if you need help working this out)
  • Hiring yachts, launches, or other recreational boats
  • Food and drink consumed by staff (both onsite and offsite)

For a more comprehensive list, check out Inland Revenue’s business entertainment rules by following this link.

GIFTS

Yes! You can generally claim between 50-100% of the cost of staff presents, but you may need to pay FBT on such gifts. Keep in mind that there are thresholds, so you may avoid FBT if you only provide ‘minimal’ fringe benefits. For example, food and drinks and a local venue might be exempt because your team can’t choose when and where to enjoy that particular benefit.

Some 100% deductible gifts include:

  • Calendars
  • Books and gift vouchers (iTunes, store vouchers etc.)
  • Tickets to an event or movie
  • General presents (flowers, knick-knacks, clothing etc.)

Some 50% deductible gifts include:

  • Alcohol (beer, wine, champagne etc.)
  • Ham, biscuits, gourmet food hampers
  • Meal vouchers
  • Chocolate

Remember, the current tax exemption figures are $300 per employee per quarter and $22,500 maximum employer exemption per annum. If you exceed the exemptions you will need to pay Fringe Benefit Tax on the total value of the benefits. To double check your tax obligations for gifts, you can consult the IRD’s detailed information about FBT and the Fringe Benefits Guide here.

CHARITY

‘Tis the season of giving, so if your business is looking to get amongst the community with charitable deeds this Xmas; donating gifts, food, or some form of entertainment – you can deduct 100% of the cost!

OTHER

  • Freebies/ giveaways promoting your business are 100% deductible
  • Entertainment you provide to a publication for review of your business is 100% deductible
  • Overseas entertainment is 100% deductible – Whoop! Take us to Mexico!
  • Vehicle use – Is your employee planning to use a business vehicle for a private trip over the silly season? This will most likely be perceived as a fringe benefit, so will be subject to FBT charges.

The IRD guides are very clear and provide great examples of what is and is not tax deductible, and when you need to be paying FBT, so we recommend making use of them this season.

We are always happy to field your festive tax questions. In fact, we dare you to come up with one we can’t answer!

Common Tax Due Dates 2015/2016

Income Tax

7 July 2015 // 2015 tax return due to be filed for those without extension of time
28 August 2015 // 1st provisional tax instalment payment due for 2016
15 January 2016 // 2nd provisional tax instalment payment due for 2016
7 February 2016 // terminal tax due for payment for 2015 for those without extension of time
31 March 2016 // 2015 tax return due to be filed for those with extension of time
7 April 2016 // terminal tax due for payment for 2015
7 May 2016 // 3rd provisional tax instalment payment due for 2016

GST

28 June 2015 // Apr-May 2015 GST return and payment due
28 August 2015 // Jun-Jul 2015 GST return and payment due
28 October 2015 // Aug-Sep 2015/Apr-Sep 2015 GST return and payment due
15 January 2016 // Oct-Nov 2015 GST return and payment due
28 February 2016 // Dec-Jan 2016 GST return and payment due
7 May 2016 // Feb-Mar 2016/Oct-Mar 2016 GST return and payment due

PAYE

Returns and payment due on the 20th of the following month, each month.
For any other tax due dates (such as those businesses without a 31 March balance date) please call Accountants Plus on 04 974 5056.

IRD Reminder

You may have received a text message from the IRD recently about tax being due on the 7th of April. This reminder is a new IRD initiative!

We just wanted to let you all know that this reminder is in relation to 2014 income tax. It is the final payment to wash-up any tax still due for the 2014 tax year.

We sent out the bulk of our payment reminder letters this week so you should receive them shortly with the amount you need to pay. Any questions please contact your client manager or reception on 04 974 5056.