Wanganui Rivercity Press Article
Christine Savage is a Senior Accounting Technician within our business advisory team.
If you have a particular subject you would like Christine to cover in an article contact her on csavage@silks.co.nz or
ring her on 06 345 8539.
We hope you had a relaxing break over Christmas and are recharged and ready to tackle 2012.
Now that the expenses are coming in for the Christmas parties and gifts or bonuses that you gave to your clients and staff last year, you may be wondering how to treat these costs.
Under the entertainment rules, Government have clearly set out that Christmas functions for staff are only 50 percent deductible for both GST and tax.
In relation to Christmas gifts for employees, tax rules will vary depending on if the gift is cash or a gift of some other kind.
Cash gifts are treated the same as wages and PAYE rules apply – tax should be deducted as per their usual wage.
If the gift is not in cash, for example a bottle of wine, then Fringe Benefit Tax (FBT) rules apply. There is an exemption from having to account for FBT up to a value of $300 per quarter per employee to a maximum of $22,500 per year for all employees. This means that in most cases your gift of $300 or less can be claimed as a tax deduction without having to account for FBT.
FBT in general is a complex and tricky area so we recommend discussing any concerns with your Markhams advisor.
Published 26 January 2012
