Holiday Survival Advice

1. Stock up!

On everything, the best way to stay sane is to avoid the shops, get double everything in this next shop. Check you have enough gas in BBQ, gas in tank and gas for the house. Buy more champagne than you think you'll need, buy heaps of beers and 20 bags of potato chips.

2. Taxi!

Store the local taxi cabs number in your phone and don't drink and drive, ever!

3. Pre-empt a hangover!

Get a survival kit together, panadol, sachet rehydrate packets, easy freezer food and apparently, pickle juice!

4. Slip, slop, slap.

Wear sunscreen, chapstick, zinc, sun hat, sunglasses and get in the shade.

5. Exercise

See if you can fit in a couple more runs than usual this week, ready to blob out post Christmas Turkey

5. Library

Get books and magazines at the ready, read the reviews or check out the recommended reads at the library....get ready to lie around.

6. Games and fun

Get fun things for the kids to do ready for the odd rainy day. Plan some activities, walks, visits to the park, fishing or bike rides.

7. Be careful in the water

Swim between the flags, be sensible and look after your mates.

8. Drive safe

Be patient and drive below the speed limit, be in mantrol

9. Have fun, rest and relax

Most of all have fun, shake off 2011, see your friends, eat, drink, be safe and merry!

Merry Christmas everybody!

Book out your bach, avoid a tax headache!

Recent years have seen a surge in popularity in the short-stay rental of holiday homes. The internet has made it easier to list, book and review baches and cribs which are available when owners aren’t in residence.

Inland Revenue have recently issued a paper proposing new rules on mixed-use assets (including holiday homes) where there is a mixture of business and personal use, with revised criteria that should be adhered to when booking out the bach. But until the rules are formally changed, the current policies still apply.

Firstly, it’s vital that your intentions are bona fide. You must market the holiday home in a commercial manner such as setting up and using a website for the property, registering the property with a reputable holiday home website or listing the property for short stay rental with local real estate agencies. These efforts cannot be seen to be ‘token’, you should be accepting offers from suitable renters.

Secondly, your own (plus family and friends’) use of the property must be diarised so you can determine the days in a year that the property was available for renting out.
If the property is owned by an individual or a family trust the expenses relating to the property including the utilities (power, rates, insurance), maintenance and interest on debt will be apportioned according to the number of days in a year the house was available for rent.

There are GST issues too. Short stay accommodation is a taxable supply for GST purposes so if the annual rent you are receiving exceeds $60,000, the owning entity (individual, partnership, company or trust) is required to register for GST and return GST on the outputs (rent) and inputs (expenses and improvements) made and received. This threshold may seem high but some do have more than one holiday home in the same entity! This threshold includes the market value of free or cheap use of the bach by persons associated to the owner.

The value of the property becomes a taxable supply when registration occurs and when the property is sold or the entity de-registered. Both the income tax and GST issues can be quite tricky so we recommend consulting us to make sure all the tax bases are covered correctly.

Sponsor a child in NZ

Would you believe that one in six children in New Zealand are living in poverty? An amazing programme set up by Kids Can means that you can sponsor a NZ child for $15 a month. This will ensure that they have shoes, a raincoat and enough food to eat. With this basic set up these kids can get to school and be ready to learn- Kids Can believes that with education comes opportunity. Kids Can is a registered Charitable Trust that was set up in 2005 with support from Guardian Trust, they receive help with their ‘Food for Kids’ programme from the government but rely on individual givers, community trusts, key partners and foundations to run this amazing programme in NZ. It is easy, jump online at www.kidscan.org.nz and set up an automatic payment of $15 per week. This is good, get on board!

Christmas Hours

Merry Christmas and a Happy New Year from the team at Findlay & Co
Our offices will be closed from 5pm on Friday 23 December 2011, reopening Monday 16 January 2012

Challenge Wanaka, coming to a town near you, if you live in Wanaka!

What gifts are tax deductible?

Let’s look at the tax treatment of saying thanks to customers and staff typically with gifts, wining and dining.
Inland Revenue’s IR268 guide gives the following examples of where entertainment expenses are 50% deductible:

• Taking customers, suppliers and business associates out for dinner or putting on a function for them
• The traditional Christmas party for staff
• Shouting customers, suppliers and staff to an event, e.g. a rugby game or a show
• Taking them on a jaunt in your launch (running/hireage costs and food and alcohol)
• Giving them the use of your bach or time share apartment as a thank you gesture (the occupancy costs)

We’ve been asked ‘why only 50% deductible?’ Apparently it’s because we get some personal enjoyment or benefit from quaffing a wine and tucking into a steak (too right!).

In lieu of a Christmas party you may give your employees restaurant vouchers to use at their discretion. This cost is fully deductible but is subject to fringe benefit tax (FBT), although there is an exemption of $300 per employee per quarter (a maximum exemption can apply). The same treatment applies to staff gifts, again fully deductible but subject to FBT under the ‘other benefits’ category.

As a thank you gesture many firms give their customers gifts during the festive season. The cost of the gifts is fully tax deductible as marketing and promotion expenditure.

Many firms pay their staff a Christmas cash bonus. These payments are classed as ‘extra emoluments’ and are fully deductible but have PAYE deducted at the employee’s marginal tax rate e.g. 33% if earning over $70,000 per annum.

If in doubt about where you stand tax deductibility-wise with your generosity to customers and staff, check with us and we’ll help you get it right.

Calculating Annual Holiday Pay

Kiwi businesses, especially those involved in contracting and service industries, often close for annual holidays just prior to Christmas and re-open in the New Year. Many businesses encourage their staff to take leave over the festive season ‘when things are quiet’. Staff employment agreements will include provision for staff to take at least part of their annual leave during this close-down period. The calculation of holiday pay is an integral part of employees’ final pay for the calendar year. Employees are entitled to receive their pay for annual leave before they commence their leave. This provision provides an employee with money to pay for travel and accommodation.

The employer and employee can agree to leave the normal pay cycle undisturbed by the time off work. If so, it’s recommended that the employees’ employment agreements reflect this.

Calculating annual holiday pay

Whichever of the following is the larger becomes the rate of the weekly holiday pay.

1. ‘Average weekly earnings’: Calculate ‘total gross earnings’ for the 12 months before the end of the last pay period before the annual holiday and divide this figure by 52.

2. ‘Ordinary weekly pay’: Multiply the ordinary hourly rate of the employee’s pay as at the start of the holiday by the number of hours worked in a ‘normal’ week.

Calculating pay for statutory (public) holidays

1. ‘Relevant daily pay’: Find the amount of pay that the employee would have received if he or she had worked on the day concerned.

2. ‘Average daily pay’ is used when using relevant daily pay is not possible or practicable or there is variation in the daily pay during the pay period when the holiday occurs. Calculate gross earnings for the 52 weeks before the end of the immediately preceding pay period and divide by the number of whole or part days during which the employee earned those earnings including days of paid holiday or leave.

In the case of employees who have commenced employment during the year, their average weekly earnings are calculated by taking the amount of their gross earnings from starting work until the last pay period before the holiday and dividing that amount by the number of weeks worked. For examples on holiday pay please visit the Department of Labour’s website: http://www.dol.govt.nz/

Pay calculations can be complex especially when employees receive allowances, (e.g. travel) and have deductions made (e.g. KiwiSaver, student loan) so contact us if you need assistance in getting these important calculations right.