INSTRUCTIONS

Josie has asked for some assistance in relation to the taxation obligations of Express Events Limited as well as her personal taxation obligations.

SCENARIO

Josie Funtime has a recently set up a small business ‘Express Events Limited’ which specialises in party planning and event management. Josie is both a shareholder and an employee of the company.

PART B REQUIREMENTS

Apart from Josie, the company employs the services of the following people:

Rosie Jones – Administration assistant (part time)

Works 25 hours per week

Member of KiwiSaver (4% employee contributions)

Tax code: M

Carrie Brown - Event Specialist (full time)

Not a member of KiwiSaver

Has a student loan

Tax code: M SL

Robbie Farr - Event Specialist (full time)

Member of KiwiSaver (8% employee contributions)

Tax code: M

Haidee Spruce – Cleaner (casual)

Works as required

Not a Member of KiwiSaver

Tax code: Not provided

Josie has asked for some assistance in relation to the taxation obligations of Express Events Limited as well as her personal taxation obligations.

PART A: Employer Obligations and Schemes

Question 1

Express Events Limited engages the services of Haidee to undertake cleaning at various venues following large events and parties. There is no formal contract between Haidee and Express Events Limited. When her ‘services’ are required, Josie will contact Haidee, providing her details in relation to the nature and location of the job as well as the ‘expected’ hours to complete the job.

If available, Haidee will complete the job using her own cleaning supplies and equipment and will be paid by Express Events Limited at the completion of the job. If unavailable to complete the job, Haidee will often ask her sister, Lucy Spruce.

Haidee is popular amongst ‘the team’ at Express Events Limited and is a regular attendee at ‘Friday evening work drinks’ and team Christmas parties.

Required:

Discuss and justify whether you believe Haidee is an employee of Express Events Limited or an independent contractor.

Question 2

Express Events Limited undertakes a pay-run on a fortnightly basis. For the fortnight ended 31 March 20x2, Gross amounts of pay were as follows:

Rosie:            $1,030.00

Carrie:           $2,160.00

Robbie:         $1,870.00

Haidee:         $350.00

Required:

Part a)

Using the current rates for deductions, calculate for each person (where appropriate) the deductions for PAYE, Student Loan and Kiwi Saver.

NOTE: Please ensure you use the current PAYE calculator from the IRD website.

Assuming Express Events Limited is a small employer, state the payment due date for the deductions in a) above.

Part c)

Rosie informs you that she has recently separated from her partner. She has two children (aged 10 and 7) and is unsure of whether she is eligible for any tax credits under the Family Assistance scheme.

Explain to Rosie details of the Family Assistance scheme. Include in your explanation whether she would be eligible for tax credits under this scheme.