Wāhanga 3 - Ngā kawenga atu anō Part 3 - Further obligations

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Employers workshop - Further obligations

We're here to help

Part 3

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Welcome to an introduction to employer obligations, further obligations.

This is part three of our series.

This video will give you an overview of FBT, ACC, and other relevant information that employers need to know.

Feel free to pause or review the video as necessary.

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We'll talk about

• Taxable and non-taxable Allowances
• Employing your spouse
• Fringe Benefit Taxable
• Online tools
• Further obligations

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Here’s what this video will cover.

We’ll discuss an overview of employer paid allowances, what you need to do if you want to employ your spouse, when fringe benefit tax applies, online resources that can assist you, and information on ACC.

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Allowances

There are four main types of allowances:

• Travel
• Reimbursement
• Meal and clothing
• Accommodation

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If you pay allowances to your employees, you’ll need to establish whether they’re taxable or not.

There are 4 main types.

Travel allowances can be paid to employees for work related travel, or travel between home and work.

They may be tax free, providing certain conditions are met.

If you reimburse employees for actual expenses they’ve incurred while doing their job, this is called a reimbursing allowance.

These are not taxable.

Employers sometimes give employees a meal allowance when they need to remain at work during meal times, or provide an allowance to buy clothing for work.

Usually these are taxable, but may be tax-free if certain conditions are met.

If you provide accommodation to staff, or pay them an accommodation allowance, it will probably be taxable.

They may be tax-free, provided certain conditions are met.

The conditions around tax-free allowances are on our website.

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COVID-19 allowances

An allowance paid to employees while working from home during the COVID-19 pandemic for:

• Furniture
• Telecommunication costs
• Other expenditure

Employers are not obligated to pay this allowance to their employees

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Inland Revenue has issued a new determination covering specific allowances.

Employers can choose to pay their employees an allowance to reimburse costs incurred while working from home during the COVID-19 pandemic.

Employers can make a tax-free payment of up to 400 dollars per employee for furniture costs.

For telecommunication, an employer can make a payment of up to 5 dollars per week, tax-free, per employee.

For any other expenditure, such as power, an employer can make a tax-free payment of 15 dollars per week, per employee.

You don’t have to estimate or show what the employee’s actual expenses are.

This determination is a temporary response to the COVID-19 pandemic.

It only applies to payments for expenses incurred between March 17, and September 17 2020.

And it’s not intended to suggest that employers must make these payments to staff who are working from home.

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Employing your spouse

Businesses need approval to claim a deduction for salaries or wages paid to a spouse.

To apply, you’ll need to provide the details of:

• the work to be done
• the average hours worked
• the wages / salary to be paid
• how the payment is made
• the type of business you have

Note that companies don’t need this approval

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If you want to claim a deduction for wages paid to your spouse, you need to have Inland Revenue approval first.

We’ll need to know what sort of work will be done, how many hours will be worked, the gross wages paid, how payment will be made, and the type of business you have.

We’ll review your request and notify you whether it’s been accepted or not.

Note that companies don’t need to apply to be able to claim this deduction.

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Fringe Benefit Tax

Benefits provided to employees. There are four main types:

• Vehicles available for private use
• Free or discounted goods and services
• Low interest loans
• Employer contributions to insurance policies and funds

See your accountant for advice

There is an FBT guide (IR409)

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Fringe benefit tax applies to the benefits you provide to employees.

There are 4 main types.

Business vehicles available for private use, free, subsidised, or discounted goods or services, low-interest loans including advances on wages, and employer contributions to employee insurance policies and funds.

There are exemptions to fringe benefit tax.

We suggest you talk with your accountant for advice.

We also have an FBT guide.

You can find the IR409 on our website.

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Online resources

IR335 guide, PAYE calculator, youtube clips and myIR

www.ird.govt.nz

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We have a number of resources to support employers.

There’s our IR335 employers guide, our PAYE calculator, and our YouTube videos.

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Further obligations

• Employment NZ
• Employment agreements, Leave, Health and Safety, etc
• www.employment.govt.nz
• 0800 20 90 20
• ACC
• Employer levies
• www.acc.co.nz
• 0800 222 776

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As an employer, you have a number of legal obligations.

The employment New Zealand website has a lot of useful information, including an employment agreement builder, and details about leave etcetera.

Visit their website to find out what you need to know.

Employees pay ACC levies through PAYE for non-work accident cover.

Employers pay employer levies to cover staff for work related accidents.

The levy rates vary, depending on the type of business activity.

ACC send out invoices to employers around June each year.

The ACC website has information about employer levies, and a levy calculator.

You can also ring them if you have questions.

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Tax relief - COVID-19 Coronavirus

• If you've been affected by the downturn in business due to COVID-19 coronavirus, we have a range of ways to help.
• Talk to your tax agent, visit ird.govt.nz/covid19, or phone 0800 473 566 for more information.

Go to ird.govt.nz/covid19 for more information.

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The Government has introduced a number of ways to support businesses that have been impacted by COVID-19.

This includes options with respect to tax relief.

For the latest updates, please go to our website and view the COVID-19 page.

You can also contact your tax agent, or ring our contact centre to discuss your specific situation.

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