Campbell Tyson Blog

Justice minister Amy Adams said that the Government had accept the recommendations of the 2013 Law Commission's review of Trusts and Trust Law in New Zealand.

At the latest Law Society Conference, Ms Adams said that a new act is critical and long overdue. There has been no major reform to the Trustee Act since it's formation in 1956, almost 60 years ago.

The seventh Budget from Finance Minister, Bill English is very much a balancing act with increases in benefits for some citizens offset by the removal of incentives for others.

Family Forecast

Fresh off plenty of political discussion around Child Poverty, the Government has introduced benefit increases for families with children by $25 per week after tax, the first non-inflation adjusted increase since 1972:

• Childcare assistance for low-income families will increase from $4 an hour to $5 an hour for up to a maximum of 50 hours of childcare a week for each child.
• Student Allowances for families with children will increase by $25 a week.
• Both the Working for Families (WFF) in-work tax credit and the WFF tax credit abatement rate will increase from 1 April 2016:

* Low-income working families earning $36,350 or less a year, before tax, will receive an extra $12.50 per week and some very low-income families will receive an extra $24.50.

* Working families earning more than $36,350 will receive more from WFF, but the amount is dependent on each family’s income and it won’t be more than $12.50 a week

* Families earning more than $88,000 a year will see slightly lower WFF payments, with the average reduction being around $3 a week

These increases have been tempered by part-time working beneficiaries needing to work 20 hours per week versus the 15 hours of the past. Sole parents and partners of beneficiaries are also now expected to seek at least part-time work once the youngest child turns three, as opposed to five years previously.

From 1 April 2015 the adult minimum wage rate will increase to $14.75 an hour – pop it in your diary and ensure Payroll is aware.

Thinking of hiring staff to get more done, but worried about the cost? Business.govt.nz's new "Employee cost calculator" helps small to medium businesses make confident hiring decisions.

31 March represents tax year end for the majority of taxpayers. So as we settle back to reality after the Xmas break, it is worth considering tidying up the books in anticipation of financial year end:

Jingle bells, mistletoe and mince pies... Christmas is just around the corner and at this time of year we are often asked for clarification around the rules on entertainment and client gifts.

Entertainment

Entertainment is generally 50% deductible for tax purposes and falls under four main areas:

• Corporate boxes
• Holiday accommodation
• Pleasure craft, such as a corporate yacht
• Food and drink

It is primarily the rules around food and drink that people are interested in at this time of year.  Examples of where food and drink are 50% deductible include:

• Business meals consumed away from the business premises (i.e. an offsite Xmas function, taking a client or staff member out for dinner etc).
• Food and drink consumed on the business premises at a party, reception, celebration meal or other social function (including after work drinks or a Christmas party).  Note:  this does not apply to everyday meals provided in a staff cafeteria or light working lunches provided to staff.
• Any event or function away from business premises to build staff morale or goodwill i.e. Friday night 'shouts' at the pub.
• In an area of the business premises reserved for use at the time by senior staff, such as an executive dining room used to entertain clients.

Client gifts

Client gifts are 100% deductible – even if they comprise food or drink.  A gift is something that is given away for the recipients private enjoyment, for example a gift basket or bottle of wine.  Funnily enough though, if you buy your client a bottle of wine and then drink it with them the cost is entertainment and only 50% deductible!

These rules can be quite a grey area so please contact us if you would like some clarification before you buy...