MBS Advisors Newsletter - Summer 2025/2026

Update from MBS Advisors

As we head into the festive season and the end of another busy year, we would like to thank you for your continued support and trust throughout 2025. From all of us at MBS Advisors, we wish you and your family a very Merry Christmas and a safe, enjoyable holiday period. This time of year is an opportunity to reflect on the year that’s been and to plan ahead with confidence for the year to come.

In this final newsletter for the year, we’ve included a number of timely reminders and practical guides to help you navigate the tax implications of the festive season. We cover the tax treatment of allowances, benefits, bonuses and lump sum payments, along with guidance on gift cards and vouchers, employee gifts, and Christmas parties — all common focus areas for Inland Revenue. With entertainment expenses and FBT rules often causing confusion, these articles are designed to help you make informed decisions and avoid unexpected tax surprises.

We’ve also included important firm updates and tax dates over the coming months. As well as a notice regarding upcoming changes to Figured subscription pricing from February 2026.

As always, if you would like to discuss how any of these matters apply to your business or personal circumstances, please don’t hesitate to get in touch. We look forward to working with you all again in the New Year.

Jeremy

MBS Advisors - Christmas shutdown

MBS Advisors office will close for business this year at 12pm 23 December 2025 and will reopen in the New Year 8am Wednesday 7 January 2026.

Tax and Paying People – allowances, benefits, lump sums

Sometimes you may pay your employees sums in addition to their normal wages, such as:

allowances
benefits
holiday pay
lump sum payments
Christmas or performance bonuses

Some are tax free, but most are taxable. For some, the employer pays tax. For others the employer deducts PAYE on the employee's behalf.

You may also provide various non-cash benefits to your employees as part of their total employment package. Even where the benefits are not in cash, they still have a value which is taxable.

The tax treatment depends on what the payments are for and the circumstances that apply.

It can be confusing working out the tax treatment of these payments for your business. Let us know if you would like to discuss how the rules apply to your business by clicking the link below.

'Tis the season for giving… but what can you claim back?

Parties and gifts are all part of the festive fun, but they can cost a small fortune. And it’s not always easy to understand the rules around entertainment expenses so you know what’s deductible and non-deductible before you fork out for your staff and customers.

Gifts, bonuses, parties, and more: here’s a brief breakdown of what you can and can’t claim this festive season.

Employee gifts

Gifts that are not subject to the entertainment tax rules (vouchers, hampers, flowers) are fully deductible and exempt from Fringe Benefit Tax (FBT) if they cost less than $300 per employee per quarter, and the total for all staff stays below $22,500 a year.

However, gifts that do fall under the entertainment tax rules, like food hampers or wine, or taking your team to a show or event, are 50% deductible, and not liable for FBT.

Cash bonuses

Bonuses are classed as income, so PAYE and other payroll taxes apply. These ‘lump sum’ payments are taxed at a flat rate based on your employee’s income bracket.

Client gifts

Food, drink, or entertainment gifts are 50% deductible. Other gifts (flowers, movie tickets, a book) are 100% deductible

Workplace events

Christmas parties, client dinners, or team drinks are 50% deductible, while morning teas, office lunches, and charitable donations are fully deductible.

Remember: GST adjustments apply for entertainment expenses that are 50% deductible.

Make sure you keep all your invoices and receipts for business entertainment expenses. Not sure where your Christmas spending fits? Give us a call.

Gift vouchers and gift cards — what about the tax

If you are a trade supplier, you might be considering providing gift cards or vouchers to clients for the festive season. There are various tax treatments, depending on the circumstances.

Trade suppliers are allowed a deduction for the expense incurred on the gift cards.

Gift cards or vouchers provided to clients which are not limited to food and drink, i.e. ‘Prezzy cards’ or general merchandise stores, are 100% deductible. Gift cards from merchants selling only food and drink, such as liquor store gift cards, may only be 50% deductible, coming under the entertainment expenses rules.

Where trade suppliers give gifts cards to trade customers, the gift cards are income of the trade customers equal to the amount of the face value of the cards.

Where you or your customers provide gift cards and vouchers to employees, then more rules come into play. Inland Revenue now distinguishes between so-called ‘open loop cards’, prepaid cards co-branded with a credit card (eg Prezzy cards), and ‘closed loop cards’, prepaid cards only accepted by certain merchants (eg Mitre 10 gift cards). Currently where gift cards are provided to employees, Inland Revenue treat open loop cards as being subject to PAYE, and closed loop cards subject to FBT where such cards are provided to employees. However, as many employers have been treating open loop cards as being subject to FBT, Inland Revenue have stated they will not seek to apply resources to correct taxpayers on this. Changes to the law to allow this treatment are expected next year.

This is clearly a focus area for Inland Revenue, in particular the tax treatment taken by customers who receive gift cards. With the upcoming changes to the tax treatment, we’ll keep you informed.

MBS Update

Fireworks Extravaganza

We were thrilled to sponsor the Morrinsville Fireworks Extravaganza in early November 2025. The event brought together families, local businesses, and visitors for an evening of fun and community spirit. Well attended and brilliantly organised, it was a fantastic way for the town to celebrate together, and we were proud at MBS Advisors to support an event that highlights the pride and vibrancy of Morrinsville.

Organic Farm Visit

The team at MBS Advisors recently had the pleasure of visiting an organic farm in Patetonga as part of our ongoing educational development. It was a fantastic opportunity to learn more about sustainable farming practices and the dedication required to run a certified organic operation. We sincerely thank the farm owners for welcoming us and sharing their knowledge and insights so generously.

Important Dates