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Entertainment Expenditure — Provision of Coffee for Employees

We often see instances of business owners purchasing food and drink and wishing to claim a deduction through the business.  Whilst the general permission will give some guidance there is a further regime that can apply to limit the claim you make – the entertainment regime.  The following question and answer from CCH illustrates the rules in terms of coffee being purchased for staff.   Question A company is considering three options for…  Read more

AIM-ing to please

IRD are promoting AIM (Accounting Income Method) pretty hard as they envisage great benefits in adopting this method of paying provisional tax.   We agree mostly and see some significant advantages, including:- · Promoting best practice by ensuring regular reporting and assessment · Increasing contact with key advisors (in this case us) · Promoting financial awareness by introducing accounting adjustments and ensuring you understand and acknowledge these · Better aligning…  Read more

Provisional Tax Options 2018

Provisional tax is effectively a progress payment to ensure that tax is being paid by most taxpayers as they earn their income throughout the year. It is paid in instalments, the number of which can depend on your GST filing cycle. You become a provisional taxpayer when your Residual Income Tax (RIT = end-of-year income tax less any tax paid at source) is greater than $2,500.   There are 4…  Read more

Food, Drink & Entertainment Expenses

Clients often ask what they can and cannot claim in relation to food, drink and other entertainment expenses and this area often tends to be confusing.  Due to this we see clients either claiming everything or nothing. Claiming everything can leave you exposed to investigation with interest and penalties being imposed on overclaimed tax.  This concern often leads other clients to claim nothing thereby missing out on a genuine tax…  Read more

What business records do I need to keep?

As you’re probably aware, it’s a legal requirement to keep your business records for at least 7 years. For many, the threat that IRD may want to conduct a routine audit is a key motivator for keeping good records.  But there are other advantages too including making things easier to find for insurance claims, explaining variances from your budgets, or answering questions and requests when your accountant compiles the year-end accounts.…  Read more

How do I claim vehicle expenses when I have a company?

Claiming vehicle expenses in companies is increasingly becoming an area of interest for Inland Revenue and businesses are often exposing themselves inadvertently to investigation and penalties through simply not being aware of the issues.  So, below is some basic explanation and help. Currently companies can claim expenses in two ways depending on the ownership of the vehicle. • Privately owned vehicle – mileage rate, currently the Inland Revenue rate of 72…  Read more

Can I claim my vehicle expenses?

If you are self-employed or in a partnership and you use your own vehicle privately as well as in your business, your work related vehicle expenses are claimable.  These include petrol, diesel, registration, WOF, repairs, tyres, road user charges etc.  So how do you work out what portion of your expenses are work related, and therefore deductible? You can choose one of the 4 following methods to calculate what amount…  Read more

Christmas gifts and parties for employees

It’s normally in the run up to Christmas that we begin to consider gifts or a party to reward our employees for their services over the last year. Done right, the goodwill generated can be significant with staff feeling valued and part of something great. Which all leads to a better business with hard working and loyal staff. But, before we settle on how to reward our people let’s consider…  Read more

Are client gifts of food and drink tax deductible?

For a long time many have considered that gifts of food and drink given to clients, say at Christmas, have been fully deductible for tax. Certainly, for a good while Inland Revenue thought so too. However, Inland Revenue has recently changed their minds and have affirmed the fact that they see these food and drink gifts being subject to the entertainment rules. These rules operate to allow only 50% of…  Read more

What expenses can I claim?

Probably the most frequently asked question by those starting in business and those already trading is “what can I claim as business expenses?” Simply put Inland Revenue offer a simplistic overview of what can be claimed as expenses in this video but, in my opinion, this doesn’t quite go far enough. In response to simplistic advice we often hear people saying things like:- • Bob puts through his wife’s petrol…  Read more

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