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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 129
some entertainment: secon CX 29; and
The rules relang to entertainment are complicated – somemes, entertainment is
deducble for the employer and sll gives rise to FBT, or does not give rise to FBT, or is only
50% deducble
The rules are complicated because “entertainment” is a big category – therefore, it is highly
suscepble to tax avoidance as some entertainment expenditure is business-oriented and
others are just personal expenditure for which the employer is trying to get a deducon
disncve work clothing: secon CX 30
Normal clothing allowance is subject to FBT
However, there is no FBT for disncve work clothing (e.g. McDonald’s uniform)
Unclassified benefits (
secon CX 37
)
o
“Unclassified benefit means a fringe benefit that arises if an employer provides an employee with a benefit in
connecon with their employment that is –
not a benefit referred to in any of secons CX 6 to CX 16; and
not a benefit excluded under this subpart.”
o
These are benefits that do not have parcular rules relang to them – they are sll taxable under subpart RD
Other common fringe benefits include cheap goods, cheap services, telephone and child care
Some fringe benefits are chargeable neither to income tax nor to FBT. This is so, in parcular, of some
benefits provided on the employer’s premises. Examples include parking; child care; canteen (light
meals only).
OBLIGATION TO PAY FBT
RA 5
Tax obligaons for employment-related taxes
Withholding and payment obligaons
(1)
A person who makes a payment or provides a benefit of 1 of the following kinds must either withhold and pay, or pay,
the amount of tax for the payment or benefit to the Commissioner under subpart RD (Employment-related taxes) by the
due dates:
…
(b)
a fringe benefit:
…
Timing for PAYE income payments
(2)
An amount of tax withheld from a PAYE income payment must be withheld at the me the person makes the payment.
Secons RA 5 and RD 26 provide that a person providing a fringe benefit must pay FBT
Note that the fringe benefit must be given to the person in their capacity as an employee – if given to them in their
capacity as a shareholder, then it is a deemed dividend
RESIDENT PASSIVE INCOME AND NON-RESIDENT PASSIVE INCOME
There are two categories – resident and non-resident
o
Income will fall under a category depending on who the recipient is (i.e. who is deriving the income) – if they
are a New Zealand resident, they are subject to resident withholding tax, and if a non-resident, they are
subject to non-resident withholding tax
RESIDENT PASSIVE INCOME
Resident withholding tax is imposed on “resident passive income”
o
“Resident passive income” means (
secon RE 2
):
Interest
Dividends
Taxable Maori authority distribuons
Certain payments made in connecon with share-lending arrangements
But does not cover royales
o
The rate of RWT on interest is:
For natural persons, 10.5%, 17.5%, 30%, 33% or 39% (
Schedule 1, Part D, cl 3
)
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