This blog has some helpful tips to get you through the Festive Season.
There are so many details you need to deal with at this time of the year. You have staff, payroll, clients and suppliers to think about. This is while you are also still running your business. Below are some helpful hints to get you through what can be a complicated, stressful time.
Expenses:- What is deductible and what isn't?
With Christmas upon us, here are some helpful hints. Most common entertainment expenses are at least partially personal and as such need to be adjusted accordingly.
There is a portion of personal enjoyment in addition to the business aspect of the expense in helping you to retain the staff and customers alike that generate your income. However, it is important to understand exactly what expenses are fully deductible and which need to be adjusted. The list below is a few of the common expenses and how much of each is deductible.
100% Deductible Entertainment Expenses:
- · Dinner for team members while working out of town (no client present)
- · Taxable allowance paid to team members to entertain clients
- · Donating food to support a local charitable Christmas dinner/ party
- · Donating food to a Christmas party in a children’s hospital.
- · Gym membership for any team member paid for by the company
- · Refreshments provided to your team at company meetings
- · Morning and afternoon tea for your team
- · Taking a client out to dinner while you are out of town on business outside New Zealand.
- . Staff Christmas party on or off the business premises
50% Deductible Entertainment Expenses:
- · Drinks for clients or team members on your premises
- · Drinks for clients or team members at your local pub
- · Christmas party for your team, on or off the premises
- · Taking a local client out to dinner in town
- · Hiring a boat/ launch to entertain clients
The above lists are by no means exhaustive but are simply a sample of some of the more common queries about what is or is not a deductible entertainment expense.
Payroll and Christmas Holidays
This can be a very confusing time for employers, all year you are trying to get this right and if you are not outsourcing this already, you may be thinking about it, especially with the new IRD changes that are being proposed.
The big one that gets most employers is relevant daily pay or average daily pay. This is relevant to public holidays and sick days also. This is where some employers are getting it wrong.
Payment is determined using either relevant daily pay (RDP) or average daily pay (ADP).
For working on a public holiday employees must be paid at least time and a half and this provision must be included in employment agreements.
Payment for unworked public holidays, alternative holidays, sick and bereavement leave
For unworked public holidays, alternative holidays, sick and bereavement leave employees are paid at the rate of relevant daily pay except in two specific circumstances where an employer may choose to use average daily pay.
Employers may use average daily pay (‘ADP’) only if:
- it’s not possible or practicable to calculate the employee’s relevant daily pay, or
- the employee’s daily pay varies in the pay period where the holiday or leave falls.
This means that if the employee’s daily pay varies in the pay period they have a choice of using RDP or ADP.
Estimating ADP or using ADP instead of RDP in a situation where there is no choice will not comply with the Holidays Act 2003 and may lead to an employee’s pay being incorrect.
- For public holidays, there are a number of things to work out:
- on which day the public holiday will be observed for each employee, if it’s a public holiday that might be Mondayised (or Tuesdayised)
- whether or not the day is an otherwise working day for the employee
- whether or not the employee will be working on the day
- how much the employee will be paid for the day
- whether the employee is entitled to an alternative holiday
Payment for working on a public holiday
For working on a public holiday (regardless of whether it’s an otherwise working day for the employee), all employees must be paid (at least) the greater of:
- the employee’s relevant daily pay or average daily pay (if applicable) for the time actually worked on the day (not including any penal rates in the employment agreement that relate to that day) plus half that amount again (time and a half), or
- the employee’s relevant daily pay (or average daily pay) that relates to the time actually worked on the day (including any penal rates in the employment agreement). The employee isn’t entitled to time and a half on top of the penal rate.
If an employer estimates instead of doing the calculations, it may lead to payment being worked out incorrectly
If you need any help with any of the above, please do not hesitate to contact me. I am available for some time over the Christmas period, working mornings with the exception of the Statutory holidays.