Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Paying your Children to work on the farm

Paying your Children to work on the farm

Whether it be feeding the calves after school or docking lambs, working on the family farm is a quintessential rural New Zealand right of passage for many kiwi kids.

On top of helping mum and dad out it’s a great way to learn some practical skills for a future career in the industry, not to mention perfect for saving up a bit of pocket money for those weekend trips to the big city or tertiary study.

For farming parents it’s easy to see the children as a ready source of labour for love, however Crowe Horwath Agri Tax Expert Tony Marshall, himself a former family farm child employee, has a word of caution, suggesting “We may be dealing with family, but there are certain rules that need to be followed when it comes to paying your children for work undertaken on the family farm”.

Marshall notes, “In the first instance PAYE must be deducted from any wages paid to children, just like any other employee”.

Another key point is around ensuring the wages paid are reasonable for the work undertaken. “The wages paid to the child must be reasonable based on the nature and extent of the services provided. This means that an arbitrary sum can’t be paid without due consideration of the work being undertaken”, says Marshall.

Parents need to be aware that the IRD can look into payments in this regard. “They have the ability to deem any payment made as ‘excessive’ and reallocate the wages paid for tax purposes”, says Marshall.

Marshall notes that when considering whether an amount paid is excessive, the IRD will look at the nature of the services performed, the knowledge and skill required to carry out the services, the amount that an independent employer would pay for similar services, and the amount that would be paid to an arms-length employee undertaking similar duties.

Marshall emphasises, “Basically you can’t simply pay children a wage from the farm account to obtain a tax advantage from income splitting or to support them through tertiary education when they are not actually performing work on the farm”.

Marshall says, “If farmers want to financially support their tertiary student children living away from home, they can consider making distributions from their trusts. This can have the same tax effect, however, they need to be mindful about beneficiary rights”.

There are a couple of other aspects to take into consideration says Marshall, “It is unrealistic to claim a deduction for payments made to very young children because they are unlikely to be able to perform any useful work, nor will jobs that could reasonably be considered a normal household chore be considered deductible ”.

The tax rules aren’t the only thing you will need to consider, says Marshall, “Farming parents also need to be mindful of their obligations under the Employment Relations Act and Health and Safety legislation. These obligations include the provision of a written employment agreement, the payment of the minimum wage (if over 16), holiday pay and various record keeping requirements”.

Marshall concludes, “While they may be your children, once they are being paid for work on the family farm they must be treated as an employee”.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Energy Resources Aotearoa: Doubling Of Coal Use Shows Need For Local Natural Gas

New figures showing a near doubling of coal-fired electricity generation highlight New Zealand’s energy shortage and the need for natural gas as a lower carbon alternative, according to Energy Resources Aotearoa... More>>


E Tu: ‘Sense Of Mourning’ As Norske Skog Mill Set To Close

Workers at Norske Skog’s Tasman Mill now know they’ll be losing their jobs in little over a month’s time.
On Wednesday afternoon, workers were told the mill will be stopping production from the end of June... More>>




Stats NZ: Card Spending Sees Strong Growth In May

Seasonally adjusted card spending rose by $189 million (2.3 percent) between April 2021 and May 2021, Stats NZ said today.
Spending rose across all industries for the first time since New Zealand moved to level 1 in June 2020... More>>




Auction: 1.4 Million In Rare Vintage Watches, Gems, Jewels & Diamonds Go Under The Hammer At Webb’s

An auction event showcasing over 1.4 Million dollars in rare jewels, gems, diamonds and vintage watches is due to take place this Sunday by Auckland based auction house Webb’s... More>>

Catalist: NZ’s New SME Stock Exchange, Gets Licence To Go Public

New Zealand has a new stock exchange – designed specifically for small and medium-sized businesses (SMEs) to raise up to $20 million a year from the public.
Called Catalist, the exchange has already been successfully working the private investment sector.... More>>

E-Commerce: Over 40% Of Those Engaged In The Bitcoin Community Are Millennials

Bitcoin has emerged to be a popular topic among millennials with digital currency increasingly being viewed as a potential source of creating wealth through investments. The interest in bitcoin by millennials signals the role this age group plays in the possible realization of the digital currency’s mass adoption... More>>