Menu

4 February 2019

QUESTION:

I have a query regarding a client who has received various scholarships and grants in the 2018 year.  The client is a sport person who received several amounts as a scholarship towards improving performance in the sport.  These I have treated as exempt income as they were towards the costs of education and studies.  The client also received a large amount towards development and other costs for being in the high performance development squad. I am unclear whether this latter amount is also exempt income or should I treat it as income.

ANSWER:

The grant would be assessable income.  An education grant is income to the recipient.  An education grant is a basic grant or an independent circumstances grant under regulations made under s 303 of the Education Act 1989.  However, any scholarship or bursary (other than those mentioned above) in respect of the recipients attendance at an educational institution is exempt income.


28 January 2019

QUESTION:

I have a query regarding a client who has received various scholarships and grants in the 2018 year.  The client is a sport person who received several amounts as a scholarship towards improving performance in the sport.  These I have treated as exempt income as they were towards the costs of education and studies.  The client also received a large amount towards development and other costs for being in the high performance development squad. I am unclear whether this latter amount is also exempt income or should I treat it as income.

ANSWER:

The grant would be assessable income.  An education grant is income to the recipient.  An education grant is a basic grant or an independent circumstances grant under regulations made under s 303 of the Education Act 1989.  However, any scholarship or bursary (other than those mentioned above) in respect of the recipients attendance at an educational institution is exempt income.

 

14 December 2018

Deductibility of child care expenditure

QUESTION:

An employee travels out of town on a regular basis for business purposes. When the employee is out of town the employee needs to pay a person to care for her children.

If the employer pays the employee's childcare expenses will those payments be tax deductible and subject to FBT?

ANSWER:

Where the employee incurs expenditure and the employer pays that expenditure or reimburses the employee for the expenditure, the payment is taxable income of the employee. The employer will need to gross up the payment and account for PAYE on it.

Where the employer incurs expenditure for the benefit of an employee, a fringe benefit will arise on which the employer may need to pay FBT.

Therefore, if the employer is reimbursing or paying the childcare expenses for the employee, it will be taxable income of the employee and the employer will need to account for PAYE. If the employer incurs the childcare expenses for the benefit of the employee an unclassified fringe benefit will arise. Whether the employer needs to account for FBT will depend on whether the employer breaches the de minimis threshold for unclassified benefits.

The childcare expenses will be tax deductible to the employer under the general permission on the grounds that they are the cost of providing a fringe benefit or part of the employee's remuneration.


4 December 2018 

HOW TO DEAL WITH KIWISAVER IF YOU SPLIT 

I'm 30 and separating from my partner of five years.  So far, we have been able to agree on the details of the split ourselves.  Is it true that our KiwiSavers need to be split between us? 

ANSWER:  

The answer is yes.  To be clear on this, relationship property includes any contributions made to your KiwiSaver or other retirement plan during your relationship, and the growth from those contributions.  This includes funds paid in by you, your employer and the Government, and any other retirement funds held in different countries.

That portion of your KiwiSaver fund which existed prior to your relationship is ring-fenced as your separate property and doesn't need to be divided when you separate.



Newsletters
Questionnaires
Tax Facts
Key Dates
Calculators
News & Articles