12 days of Christmas – My true love gave me…. A simple festive expression of admiration you may think, but containing some serious tax implications… Let’s consider some of them.
A partridge in a pear tree This is a supply for GST. If I purchased such an item to be used in my taxable activity I may be able to claim an input tax on this. However, is my true love associated to me? If we are a respectable married couple (or if he is my brother?), the associated person supply must be treated as a market value transaction. If instead he is just a distant admirer (stalker?) the value of consideration will be the amount actually paid, in this case nothing.
Three French hens When goods of any kind are imported, GST will typically be charged at the border. If I am carrying on a taxable activity that involves poultry from foreign locations, I can claim back this GST as an input. Note: I may also need to be aware of the customs and MAF issues around this item.
Five gold rings If I’m receiving an antique gold ring or other piece of second-hand jewellery and this is deemed to be a market value transaction (because the gifter is associated to me), how would we work out GST? An independent valuation may be needed. If I am in a business of dealing in gold rings, this will be an acquisition of trading stock at no cost. Any sale of these items will be fully taxable.
Six geese a-laying Are these geese really being used in my business, or am I eating most of the eggs myself? This is important to consider in relation to all sorts of tax issues –Can I deduct the cost of maintaining the geese. If they are owned in my company, how should my private consumption of the eggs be treated? You really need to consult your tax advisor with some of these questions.
Seven swans a-swimming Swans are clearly livestock, but unlike sheep and cows, they are unspecified livestock. We must value such swans at the end of each income year using cost price, replacement price, or market value. Unspecified livestock may also be valued using a “standard value” if the Commissioner has issued a determination in relation Swans a-swimming. I am unaware of any standard value determination relating to swans.
Eight maids a-milking Milkmaids need to live on the farm in order to be able to do their work properly; in order to do the morning milking they have to get up very early, and so it wouldn’t be practical or possible for them to commute. The provision of accommodation to an employee is treated as salary or wages for the employee (and subject to PAYE). However, in this case we would need to consider the special circumstances of our milkmaid’s situation. These would be reflected in how we value that accommodation benefit.
Nine drummers drumming A drummer would have to buy his or her kit to perform in. That might be a kilt, jacket and plaid for a drummer in a pipe band, or a suit for a jazz band drummer, and so on. If he is self-employed he can then claim a tax deduction on the cost of that costume, because a costume for a performer is tax-deductible. If our drummer should come from Scotland, he will likely be a non-resident entertainer and subject to withholding tax.
Twelve lords a-leaping What would be the tax implications if these lords a-leapt out of the country? It depends why they’re a-leaping out and for how long. Tax residency can be complicated and have serious implications. We would recommend these Lords talk to their friendly tax advisors before a-leaping off.