Friday Q&A Session - What Happens If Startups Pay Cash Bonuses at Christmas?

1. Will there be any tax?

Yes - any cash benefits are to be treated as normal salaries and wages.


2. Can employers treat this as a”fringe benefit” and get in under the annual de-minimis rules?

Cash bonuses aren’t subject to Fringe Benefit Tax so need to be included in your salary calculations for the month when calculating PAYE and other deductions.


3. What about if the employee wants something buy something and the employer pays?

Any personal expenditure incurred by the employee but paid for by the employer is considered a cash benefit.


4. What about giving employees gift vouchers?

As gift vouchers are not redeemable for cash these will not be treated as a cash benefit.  FBT rules around minimum amounts per quarter or year apply.  Get in touch to discuss your specific circumstances.


5. What about a Prezzy Card?

Our view is that a prezzy card is similar enough to cash to result in a situation like in 3 above.


6. Hypothetically, I've already paid each employee $1,000 in cash.  What do I need to do?

You'll need to put a manual pay through your payroll system which will take into account the employees deductions such as PAYE, Kiwisaver and Student Loans.

Cost of Bonus


Should you have any further queries please get in touch


Disclaimer: The above information is provided to the best of the authors knowledge at time of publication.  Laws are subject to change and independent advice should be sought for your specific circumstances.  The above information is general in nature and should not be construed or relied on as a recommendation.