From 1 April 2016, the adult minimum wage will go up to $15.25. The starting-out and training hourly minimum wages rates will also increase to $12.20 per hour from 1 April 2016.

There are three minimum wage rates:

· The adult minimum wage applies to all employees aged 16 and over who are not starting-out workers or trainees, and all employees who are involved in supervising or training other employees.

· The starting-out wage applies to starting-out workers. Starting-out workers are:

o 16- and 17-year-old employees who have not yet completed six months of continuous employment with their current employer.

o 18- and 19-year-old employees who have been paid a specified social security benefit for six months or more, and who have not yet completed six months continuous employment with any employer since they started being paid a benefit. Once they have completed six months continuous employment with a single employer, they will no longer be a starting-out worker, and must be paid at least the adult minimum wage rate.

o 16- to 19-year-old employees who are required by their employment agreement to undertake industry training for at least 40 credits a year in order to become qualified.

· The training minimum wage applies to employees aged 20 years or over who are doing recognised industry training involving at least 60 credits a year as part of their employment agreement, in order to become qualified.

GST Entertainment Expenses

For entertainment expenses, firms can only claim 50% of the GST on the expenses. At the end of financial year, you will need complete the GST Adjustments Calculation Sheet IR 372 to do relevant adjustment.

Use Personal Car for Business Purposes

If you’re a sole trader or in a partnership and you use your own vehicle in the business, you can claim the running costs for income tax.

If you use your own vehicle for both personal and business use, you’ll need to make an adjustment to claim the business-use portion for income tax. If you use the vehicle strictly for business only, you can claim the full running costs, without making any adjustments. If you use the vehicle to travel between home and work, or any personal travel, you’ll need to separate the running costs of your vehicle between business and private use. There are three options you can use – a vehicle logbook, a set mileage rate or using the actual cost.

Logbook (Recommended)

If you decide to use a logbook, you must keep it for at least three months every three years to work out the business share of your running costs. You’ll need to record the distance, date and reason for the trip in the logbook. You can use the difference between the odometer readings at the start and end of the three months to work out the percentage of vehicle expenses you can claim.

You can use the result of your three months’ recording to claim the business share of your vehicle expenses over the next three years, provided your business use of the vehicle does not change by more than 20%.

You should still keep records of the total vehicle running costs and record the total distance travelled for the income tax year.

You can find a sample logbook and blank logbook in our Resources Page.

Mileage rates
Alternatively, if you travel 5,000 km or less for business use in an income year, you may use Inland Revenue’s mileage rate of 77 cents a kilometre to make a claim on your vehicle. This mileage rate changes from time to time, please CONTACT US or check with IRD to confirm.

Actual expenditure (Not Recommended)
Instead of using the above mileage rate or logbook, you may claim deductions for the actual expenditure you incur. If you do this you must keep accurate records to work out the share of business use. Your records will need to show the reasons for the trip and the distance.

If you don’t keep a vehicle logbook, qualify to use the mileage rate or maintain actual expenditure records, you may claim the lesser of actual use or 25% of the vehicle running costs as a business expense. You could be asked to prove the percentage claimed.

Using your home for the business

Many people who run a small business use an area in the family home for work purposes. You do not have to have an area specifically set aside for the business. If you are doing this, you can make a claim for the area set aside so long as you keep a full record of all expenses you wish to claim.

If there isn’t a separate area for the business the apportionment will need to take into account criteria such as the amount of time spent on income-earning activities and the area used at home.

No deduction is permitted for any private or domestic expenditure.

The responsibility for keeping invoices and records for a home office is the same as for any other business expenses you are claiming. You can claim a portion of the household expenses, such as the rates, insurance, power and mortgage interest. You must keep invoices for these expenses.

You can only claim the expenses that relate to the area used for business. Work out the percentage of the work area, compared to the total floor area of the house. Then apply this percentage to the total house expenses.

Claims on mortgage interest
You may also claim a proportion of the mortgage interest (not principal) paid during the year. There is no GST involved in this item, so it is easier to work it out separately. Use the same method of the business floor area percentage to work out what to claim.

Telephone costs

You may claim a deduction for telephone rental if you run your business or organisation from your home. If your home is the centre of operations or management for the business, you may claim a deduction of 50% of the telephone rental. Identify those toll calls that are business-related. It is a good idea to use a highlighter on your phone bill to mark the business toll calls. If you have a separate commercial and domestic line rental, you can claim the full cost of the commercial line for both income tax and GST, but none of the domestic rental. If you make any private calls on the business line and you are charged for them, you will have to make an adjustment for them.

Claiming home internet used for business purposes
Home internet costs will generally be a private expense of the household and not claimable. However if you run your business from home you may sometimes need to use the internet as part of carrying on your business.

The portion of the expenditure relating to business usage may be claimable as a business expense. You can’t claim any part of the internet expense relating to the household’s private usage.

How the proportion of business-related internet expense is calculated will depend on the type of internet plan you have. You must calculate the business proportion you claim by a method that ensures a fair and reasonable result. You must also meet normal record keeping requirements.