The Christmas run-up can be frantic for small business owners. It’s important to think about business basics like paying taxes and staff over the festive season.
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 or staff gifts, but they may be subject to fringe benefit tax. This is paid on benefits workers get as a result of their employment. Half your holiday party expenses may be claimed in your GST and income tax returns if the expenses relate to your business.
Expenses can include:
food and drink
Business Gifts and Entertainment
Generally, you can claim the costs of gifts as a business expense, eg hampers or gift vouchers. But you may need to pay fringe benefit tax on these gifts. A meal out provided by the business is an entertainment expense and you can claim 50% as a business expense.
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.
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.
The public holidays for the upcoming Christmas break, are as follows:
Christmas Day — Friday 25 December 2020 Boxing Day — Saturday 26 December 2020 New Year’s Day — Friday 1 January 2021
Day after New Year’s Day — Saturday 2 January 2021
Any employee can ask to transfer a public holiday to another day.
You must consider requests unless you have a policy that prevents transferring public holidays.
Days in lieu
An employee is entitled to a full day off in lieu of working a public holiday — no matter how many hours they worked that day.
But they don’t get a day in lieu if:
they only ever work public holidays
they wouldn’t normally have worked that day they were on call but didn’t work, and being on call didn’t stop them doing what they wanted to with their day.