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

Staff parties

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
• entertainment
• 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.

Mondayisation

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.