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Christmas Payroll Reminders December 2012

December 6, 2012

Tax on Christmas Pays
Additional Allowances and Deductions
Terminating Staff at Christmas
Extra Pays at Christmas
What Does Extra Emolument Mean?
Clear Communications
Timing of Holiday Payments
Going Away – Need to do the Payroll?
Entertainment Expenses (not payroll but still important)
TAX ON CHRISTMAS PAYS
If a single holiday payment is made for a number of weeks, the tax is significantly reduced by apportioning it over those weeks.
If you are paying staff their holiday pay in a single pay at Christmas, and it covers more than one payroll period, your payroll will think the higher earnings are for one pay only and will tax them at a higher rate.  Check the tax and override the tax paid where necessary.  Different payrolls use different methods, give me a call if you’re not sure.
ADDITIONAL ALLOWANCES AND DEDUCTIONS
Don’t forget to pay extra allowances and deductions if your staff are on extended leave and receiving a single pay. 
Examples: child support, court fines, loan repayments.
TERMINATING STAFF AT CHRISTMAS
If you terminate staff near a Public Holiday, you are obliged to pay holiday pay plus any statutory days their outstanding annual leave entitlement extends their termination date past
In December, this could be Christmas Day, Boxing Day, New Year’s Day, the Day After.  
EXTRA PAYS AT CHRISTMAS
Extra pays are taxed at the extra-emolument rate for that employee. 
Examples of extra pays include:  Cashing up Holiday Pay, Cash Bonuses
Not sure how to do it, call me.
WHAT DOES EXTRA EMOLUMENT MEAN?
extra = more
emolument = salary, wages, fees or benefits from employment
So an extra-emolument is simply an extra payment or benefit.
CLEAR COMMUNICATIONS
Thank you to Bell Gully Lawyers for mentioning this one.  If you are going to pay a cash bonus, be clear to your staff about whether you are paying the bonus gross or net of tax.  If you decide to pay a $2,000 bonus, it is best to tell the staff whether it is $2,000 in the hand, or $2,000 before tax.  You don’t want to end up as the Grinch who Stole Christmas, or with a personal grievance on your hands.
TIMING OF HOLIDAY PAYMENT
An employer must pay an employee for an annual holiday before the holiday is taken
Unless the employer and employee agree otherwise, or the employee is terminated.
If the employee is terminated, you must pay the annual holiday pay in the pay that relates to the employee’s final period of employment.
To help with cash flow, many employees prefer to have their pay continue as per their normal pay cycle.  If you can accommodate them by preloading their pays to the bank, you will take a lot of pressure off Christmas for yourself and your staff  If staff come in to work over Christmas, payroll adjustments can be made in the first pay on return to work. 
GOING AWAY – NEED TO DO THE PAYROLL?
Set up a free web connection and do it from anywhere you have a computer and a broadband connection – home, laptop, internet cafe.  Don’t know how, give me a call. 
ENTERTAINMENT EXPENSES (not payroll but still important)
Christmas functions on or off the premises are an entertainment expense.
This means that 50% of the cost is deductible for tax and 50% is non-deductible for tax.  If you do not split the transaction at the time of the event your accountant will need to make an end of year GST adjustment.  You will have GST to pay back.
Best wishes for smooth Christmas payroll processing.
If you are working through the Christmas / New Year period, I will be available for urgent phone or web support at my standard rates.  Please ring or text first as I may not be checking my emails. 

 

Colleen KingDip
aboutBusiness | PO Box 3756, Christchurch
Business Software and Systems Consultant
providing customised setups of business management solutions
Simplify, Sytemise, Demystify
PS:  Got a friend who’s frustrated with their current business systems?
Just tell them about your experience with us and if they later engage our services, you will receive a $100 petrol voucher. 
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