It's a wrap: Preparing for the Christmas break
The Christmas run-up can be frantic for small business owners. It's important to think about business basics like paying taxes and staff before you start decorating the tree.
Claiming Christmas expenses
Throwing a staff party can be a great way to see out the year and celebrate successes, but there are tax considerations to think about.
You can claim some costs of a party or staff gifts, but they may be subject to fringe benefit tax. This is paid on benefits workers get as a result of their employment.
Half your holiday party expenses may be claimed in your GST and income tax returns if the expenses relate to your business. Expenses can include:
- food and drink
- venue hire
Entertainment expenses guide (external link) - Inland Revenue
Business gifts and entertainment
Generally, you can claim the costs of gifts as a business expense, eg hampers or gift vouchers. But you may need to pay fringe benefit tax on these gifts.
A meal out provided by the business is an entertainment expense and you can claim 50% as a business expense.
Giving to charity
You can deduct 100% of the cost of entertainment you provide to members of the public for charitable purposes. For example, if your business donates food to a party at a hospital.
Paying staff over the holidays
When there's a public holiday on a day your employee usually works, they're entitled to a paid day off - no matter how long they've worked for you.
You can only require employees to work a public holiday if it's written in their employment agreements. Also, if they agree to work, you must:
· pay them at least time and a half
· give them another paid day off later.
When a public holiday falls on a Saturday or Sunday, employees who don't normally work then get the following Monday as their paid public holiday - this is called Mondayisation.
The public holidays for the upcoming Christmas break, with the day of the week they fall on, are as follows:
· Christmas Day - Monday, 25 December 2017
· Boxing Day - Tuesday, 26 December 2017
· New Year's Day - Monday, 1 January 2018
· Day after New Year's Day - Tuesday, 2 January 2018.
Working on a public holiday
An employee is entitled to a full alternative day off if they work on a public holiday - no matter how many hours they worked that day.
But they don't get an alternative day off - also called a day in lieu - if:
· they only ever work public holidays
· they wouldn't normally have worked that day
· they were on call but didn't work, and being on call didn't stop them doing what they wanted to with their day.