TAX TIDBITS
Issue Thirty Two, October 2009
In this months issue:
Fringe Tax Benefits
Motor Vehicle Reimbursements
Fringe Tax Benefits
Take Heed – it’s not just you who is hurting in the downturn in the economy. The Inland Revenue Department’s tax take is way down on expectations, so they are looking for ways to increase tax revenue.
It has been noted that IRD investigators have been visiting places like golf club/sports grounds and boat launching car parks and taking note of sign written vehicles which would most likely be classified as “work related vehicles” for fringe benefit tax (FBT) purposes.
Please remember that if you have written a letter to employees (including yourself as shareholder employee) advising that the vehicle is not available for private use, that they need to either advise you that the vehicle has been used privately on a particular day, and therefore subject to FBT, or keep a diary note that it was a business event, i.e. entertaining clients, and note the client details.
Motor Vehicle Reimbursements
- To reimburse actual costs incurred by your employee (this can now include a depreciation factor); or
- To use the Inland Revenue Department mileage rate (recently increased to 70 cents per km); or
- To reimburse the employee based on other published rates (e.g. the AA rates); or
- To reimburse the employee using a reasonable estimate of the expenditure likely to be incurred.
A reimbursing allowance paid by you is tax free to your employee whereas a motor vehicle allowance is taxable to the employee via the PAYE system.
If you agree on a net allowance with an employee, you may be able to structure it such that the majority is a reimbursement allowance and the balance a taxable allowance, which will save you money.
Contact us for more Information on these options.
UPCOMING EVENTS
FREE BREAKFAST SEMINAR:
Tax GST/FBT Update
Tax - The three letter word that everyone hates but your accountant. It's a good time of the year to get a refresher course on the Ins and outs and new developments on GST and FBT. Its also an opportunity to get to meet and hear from all the HWI managers.
On Wednesday 7th October, at HWI offices. Please email
Umesh at
udewan@hwi.co.nz for
details or book online at
www.hwi.co.nz
under the heading SEMINARS.
Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
