One of the best things about being an accountant (yes there are some) is the ability to get up close and personal with some of the best businesses on the planet. What’s not so great is being a messenger for the IRD. Early in my career, I had an incredibly uncomfortable meeting with an elderly gent who just wouldn’t believe it was illegal to claim his glasses and hearing aid, even though he needed them to do his job. It was quite the battle, I can tell you, so instead of boring him with legislation I told him about the court case where a personal trainer was sentenced, to home detention, for claiming running shoes and that even plain clothes police were taxed on their clothing allowance.
Now, I’m not saying it’s fair. Personally, I’m on your side but is there a way around these laws? The answer is advertising. I don’t know how you feel about having your business branding plastered all over your designer jeans but it’s one way to make them tax deductible. Without advertising, most clothes fail under the scrutiny of a ‘brown-trousered’ tax investigator (unless they’re uniforms or health and safety wear). We’d hate you to get caught out so why not quizz yourself to see if you can pick what’s deductible below?
“Life, as a business owner, isn’t perfect but your outfit can be”
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Boutique Financial Chartered Accountants & Business Commentators
Copyright © 2017 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.
Yes, it’s true. Sort of, kind of anyway! Some of you are now eligible to have a company car without the sting of paying Fringe benefit tax (FBT) on it. Nothing’s quite that simple though especially when it comes to the intricacies of tax legislation and there are, of course, a whole string of eligibility requirements. We’ll cover a few of them below but this type of thing is complex and riddled with fish hooks so it’s well worth having your Chartered Accountant review your situation properly before you do anything rash.
Continue reading The end of fringe benefit tax on company cars?
As many of you know we’re just back from Jordan (that place beside Syria) so what better time to release our travel newsletter, with its usual edge of humour to offset the academia. Understandably the accounting industry tends to lack humour and I doubt very much that travel review websites, like trip advisor, were invented to provide comic relief either but they seem to have achieved it nonetheless. Some of the most entertaining reviews I’ve read will unfortunately be etched in my brain for life … particularly the unlucky traveller who, while enjoying a quiet drink by the pool, was “spewed on from the balcony above” and the couple furious about sharing their restaurant table with “Midgets” (in their words, not mine). Ignoring typo’s (such as Midges*) what you post on public forums matters especially when you’re on a business trip. What most people don’t realise is that submitting reviews and posting business updates, on social media platforms, can really strengthen your travel claim when you’re facing off against an IRD investigator. It can also work against you so read on for more tips:
_______________________________ www.boutiquefinancial.com _______________________________
Boutique Financial Chartered Accountants & Business Commentators
Copyright © 2016 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.
Have you ever tried to read a volume of tax legislation? It’s like a Twistaplot where the ending is always no. Even seasoned law students are regularly horrified by how tough the tax paper is at Otago University. Amusing then, isn’t it, that your average tom, dick and harry thinks tax is easy and that telling a darn good story will let them claim whatever they like. Personally I love a great story but have you ever tried telling a tearjerker to a computer? Essentially the IRD is one large computer system chock a block with tax law, devoid of human emotion and logic. So no matter how touching (or delusional) your story may be, if it doesn’t fit neatly into a box at the IRD, the computer will inevitably say no.
With that in mind, we’ve put together a selection of our all time favourite “doozy” stories below (which have absolutely no regard for tax law whatsoever but make for more amusing reading than tax compliant tales). Are you guilty of these financial fibs?
Continue reading Financial Fibs
With New Zealand ranked as one of the most giving nations in the World you’d be forgiven for thinking that our tax laws encourage such generosity. Instead, the rules around business gifts are tricky and mean that every time you give a gift you have to work out whether it goes in your staff wages return, needs Fringe Benefit Tax paid on it or if you’ll only get a tax deduction for half the gift (entertainment). Ridiculous isn’t it, so to help you out here’s what you need to know about client and staff gifts:
Continue reading Business Gifts
Is it too early to talk Christmas yet? Well our good friends at CCH think not and here’s some Q&A’s they’ve put together to answer all your Christmas tax questions. The first, in the series, is all about claiming travel costs to your firms Christmas party: Continue reading Christmas party travel costs
Santa is going to splash out on a band at this year’s Christmas party. He has booked the elves’ favourite band, The Pixies. Does Santa need to deduct tax when he pays the band?
Santa will have to deduct tax if The Pixies are not a company. Payments to musicians and members of a band are treated as “schedular entertainment activities” and subject to tax. Payments to the members will therefore be subject to a deduction at the flat rate of 20c for every $1 of payment if they have given Santa a tax code declaration form (IR 330). If no such form is provided, the tax is increased by 15c in the dollar on the usual withholding rate, ie, 35c in the dollar. If The Pixies hold a valid certificate of exemption (COE), or if The Pixies are a company, no tax is required to be deducted.
Reference: CCH New Zealand, Income Tax Act 2007, ss RD 8, sch 4.
Santa usually pays his elves a bonus at Christmas time. Are bonuses included in the calculation of an employee’s annual holiday pay?
This depends. Two rates are used to work out an employee’s annual holiday pay: “ordinary weekly pay” and “average weekly earnings”. Once each is calculated, the higher of the two is used as the rate of payment for annual holiday pay.
Continue reading Taxing Christmas bonuses
After Christmas Eve Santa, the elves and the reindeer return to the North Pole absolutely exhausted. Santa is proud of the team effort and would like to reward them by taking them to Hawaii for some sunshine. Santa would pay for all of the expenses – food, accommodation and airfares to and from Hawaii. Is the cost of such an overseas trip deductible? Continue reading Giving staff overseas trips
To lease or not to lease? That is the question. And it’s actually one we’re facing ourselves as we decide whether to lease or buy office space so we completely understand what a daunting decision it can be. It’s even harder when you don’t have our financial background and are up against lease companies doing their darnedest to mislead you about the tax advantages of leasing. Continue reading Should I lease or buy