Taxation of inidivisuals Flashcards
1
Q
Who is an Employee?
A
Employee is someone who is under a contract of service, employees are entitled to receive “PAYE income payment
2
Q
PAYE income payment includes?
A
- Salary and wages
- Cash benefits
- Taxable allowances
- Bonuses
- Other payment in money
3
Q
How is tax paid on salaries and wages?
A
Pay as you earn
- employer pays to IRD on your behalf
- deducted at time of payment
4
Q
Deductions for employees
A
Employment limitation denies deduction for most expenditures
Unless overridden
e.g. expenditure incurred in determining tax liability
5
Q
Employee allowances that are exempt from tax:
A
- Accommodation
- Out of town secondment
- Conferences and overnight stays
- Multiple workplaces
- Relocation
- Overtime meals
- Additional transport costs
6
Q
Employee reimbursement allowance
A
- Paying Km rate for business use of private vehicle
- Payment for business use of personal phone
- Out of pocket expense incurred in course of employment
7
Q
What is an individual in business
A
someone who perfroms a contract FOR service
Independent contractors do not pay PAYE (they pay prov tax)
8
Q
Control test
A
- Degree of control employer or principle exerts over work (Greater the control the more lean toward an employee)
9
Q
Independence test
A
- Opposite of control test
- High independence more likely to be a contractor
- High independence consists of:
Work for multiple clients
Direct responsibility for profits and risks
10
Q
Integration test
A
- Is the person an integral part of the running of the business
11
Q
Intention test
A
- What is the intention of each party regarding to the nature of the relationship
12
Q
Fundamental test or business test
A
- “Is the person who has been engaged to perform the services performing them as a person in business on their own account?”
- Yes = Contract for service = Contractor
- No = Contract of service = Employee
