Gifts of food or wine to employees30.09.2013

Question
An employer decides to give Christmas gifts of bottles of wine to some employees & Christmas food hampers to others.

How should this expenditure be treated for tax purposes?

Answer
Gifts in the form of entertainment (eg. wine & food) given to employees are subject to fringe benefit tax (FBT) because the employees can enjoy the gift when they choose.

The benefit will be an unclassified fringe benefit and will therefore not be subject to FBT if the exemption rules apply, namely, no FBT is payable if:

– The aggregate taxable value of unclassified benefits provided to each employee does not exceed $300 per quarter for employers paying FBT on a quarterly basis (or $1,200 per employee per annum for employers that pay FBT on an annual or income-year basis);

– The total taxable value for the past four quarters of all unclassified benefits provided by an employer to all its employees does not exceed $22,500 for employers paying FBT on a quarterly basis (or $22,500 for all employees per annum for employers that pay FBT on an annual or income-year basis).

IRD Mileage Rates9.09.2013

IRD has reviewed the motor vehicle mileage rate to reflect the average cost of running a motor vehicle, including the average fuel prices, and advises the mileage rate for the 2013 income year will remain at 77 cents per kilometre for both petrol and diesel fuel vehicles.

Self-employed taxpayers have the choice of using the IRD’s mileage rate, or using actual costs if they consider that the IRD’s mileage rate does not reflect their true costs. Those that choose to use actual costs must keep records to support the expenditure claimed.

Employers can use the 2013 vehicle mileage rate as a reasonable estimate of costs when they reimburse employees for the use of their private vehicle for business related travel. Alternatively employers can reimburse employees using a rate published by other reputable sources, for example the New Zealand Automobile Association Incorporated.

Note that the mileage rate does not apply in respect of motor cycles.

For more information please click here

Trans-Tasman Superannuation Portability22.08.2013

The trans-Tasman super portability scheme came into effect on 1 July 2013. The scheme allows New Zealander taxpayer to transfer their retirement savings from a complying Australian superannuation schemes to a NZ KiwiSaver scheme, and for Australian taxpayers to transfer their KiwiSaver funds to a complying Australian superannuation scheme, without adverse tax implications.

Refer to Policy Advice Fact Sheet

New Tax Rules for Holiday Homes5.08.2013

Inland Revenue has just released a factsheet setting out the new tax rules that apply to “mixed-use” asset holiday homes from the 2013/14 income year.

A holiday home will be a mixed use asset if the property is used both for private use and income-earning use, and it’s also unoccupied for 62 days or more.

Note that the new rules do not apply to residential properties used for long-term rental, or a home office and where the expense claim is based on floor area.

The factsheet details the two exemptions: income from income-earing use is less than $4,000 per year, or the property makes a loss and the income from the income-earning use is less than 2% of the rateable value of the property.

The factsheet contains a useful worked example of the new calculations required for a mixed-use holiday home.

Refer to IRD’s factsheet