Bonuses and Perks
The following ideas were taken from our Dairwn discussion forum and offer some great ideas for bonuses and perks
Overseas trips as a bonus?
Be careful that you don't end up giving a bonus that in fact costs a staff member to take up. For example if you give airfares and accommodation who is going to pay for all the meals, transport, sightseeing insurance etc that really need to be paid for to make the bonus worth while. It can sometimes mean that the poor staff member comes home from a "Bonus holiday" seriously out of pocket.
As for the tax implications from my understanding the IRD wants to make sure that they have their share of earnings so someone has to pay the tax.
If the bonus is cash then it can be taxed in the employees name (PAYE) and it will increase their taxable income which may or may not effect other issues like their child support contribution for example or their entitlement to Family support.
Alternatively it can be taken out as drawings in which case the employer is paying the tax and it increases the drawings figure and does not reflect a true cost of employment. The only way that I could see that the cost of a trip could
be tax deductible and have the GST refunded is if the trip is a direct cost to the business for example if you had a farm in Towoomba Australia and equity partners that lived on the Gold Coast which meant that you had to fly over and stay there for one or two nights to enable a directors meeting to take place!!! Wouldn't it be nice!
Livestock as part of Employment package?
This is absolutely a taxable item (just like meat). If you're writing it into a contract you'll need to check out the tax implication with your accountant.
The reality with fringe benefit tax is that if it is not paid by the employee at the time of getting the item, I'm pretty sure it becomes the employers’ taxable
responsibility and is taxed outrageously high.
2 Bonuses and Perks - General
The following links provide useful advice and information on the payment of bonuses:
Inland Revenue - Home page
Work and Income - Bonus payments
Inland Revenue - Taxing lump sum payments
Inland Revenue -Fringe benefits tax