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. For example, you can claim half the costs of staff gifts that are food, drink or entertainment (or vouchers for these). You can generally claim all the costs of other staff gifts. Keep in mind that gifts may be subject to fringe benefit tax, which is paid on benefits workers get as a result of their employment.
Half your holiday party expenses may be claimed in your income tax return if the expenses relate to your business. GST may also be claimed – this would require a tax adjustment.
Entertainment expenses guide – Inland Revenue
Business gifts and entertainment
Generally, you can claim the costs of gifts as a business expense. If the gift is for food, drink or entertainment (or vouchers for these), then only half the cost can be claimed. You may need to separate out the costs if a gift contains food and drink, as well as other items, eg a hamper.
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.
Any employee can ask to transfer a public holiday to another day. You must consider request unless you have a policy that prevents transferring holidays or you have an annual close-down period during the holidays.
Transferring public holidays – Employment New Zealand.
Working on a public holiday
An employee is entitled to a full alternative day off – also called a day in lieu – if they work on a public holiday that would normally be a working day for them. They will also be paid at least time and a half for the hours worked.
If the employee doesn’t normally work on that day, then they won’t get an alternative day off. But they are still entitled to be paid at least time and a half for the hours worked.
Alternative holidays – Employment New Zealand.
