Expenditure on venue hire, food and drink will be subject to the entertainment regime. Expenditure would include incidental costs such as hiring crockery, glassware or utensils, waiting staff, and music or other entertainment. Employers can only deduct 50% of these expenditures incurred.

Many employers are encouraging their employees to support local retailers and hospitality businesses after the lockdown by providing vouchers. If the employee can choose when to use the vouchers, then the FBT regime kicks in and the cost of the voucher is subject to FBT.

What could be nicer than a gift basket for a virtual Christmas party or movie night? Gift baskets containing drink bottles, keep cups, clothing, food and drink will typically be subject to FBT as employees can enjoy these benefits at their discretion.

Remember though that any benefit subject to FBT can also be subject to various exemptions, such as the de minimis exemption.

To thank stakeholders for all their support in the past challenging year, businesses may send gift baskets containing food or drink items to customers, clients or suppliers. Spending on these items will only be 50% deductible under the entertainment regime. If the gift basket also contains other items that aren’t food and drink (for example soap or tea towels), the expense must be apportioned between being fully deductible (non-food and drink items) and 50% deductible (food and drink).

Perhaps as an employer you have told to your employees to have a “dinner out on us” and to expense claim it. This type of expense called “expenditure on account of an employee”. Once your employee has provided a receipt you will need add the full amount of the taxable benefit to your employee’s salary or wage, with PAYE then being deducted from the total gross amount. Child support, student loan deductions and Kiwisaver are all assesessed on your employee’s gross earnings, which includes taxable benefits. The expense will be 100% deductible for the business.

Cash bonuses paid by an employer to an employee are taxable under the PAYE regime, this is a payment made in connection with the employee’s employment and not a payment that is regularly included in the employee’s salary and wages.

Given there is likely to be a desire to travel around the country this summer, some employees may be using their company vehicles as their means of transport during the holidays. Employers need to remember that FBT will arise whenever a company vehicle is available for an employee to use privately.