Tax Benefit - DET 09/02

Over a two year period we met with and presented to the IRD, putting forth an argument on behalf of our members that Home-based educators are not employees who should be included in the PAYE regime.

Rather, we said, they are individual contractors working in their own homes, and many of the costs of running a household should therefore be tax deductible.  

The IRD accepted this and created a new Tax Determination for Home-based childcare providers - DET 09/02.  

A lower tax bill for you

The Determination details the expenses that are generally incurred in providing a Home-based childcare service (whether you own your home or rent it) and also gives a method to calculate a figure for these expenses that can be then deducted from your total income…meaning a lower tax bill!

The method of calculating this figure is fairly complex, so to save you time and paperwork headaches, we developed a special Tax Calculator tool on this website for our members to use. It makes calculating ‘standard costs’ for your Tax return quick and easy.  

Inland Revenue advise they have updated the variable standard-cost and the administration/record keeping fixed standard-cost components for Determination DET 09/02: Standard-cost household service for childcare providers, with application to the 2014 income year.  The update reflects the annual Cost Price Index movement of 1.5% for the 12 months ended March 2014, as advised by media statement released by Statistics New Zealand on 17 April 2014.

In accordance with the provisions of Determination DET 09/02 as published in Tax Information Bulletin Volume 21, Number 4 (June 2009), Inland Revenue advises that, for the 2014 income year:

(a)      The variable standard-cost component will increase from $3.37 per hour per child to $3.42 per hour per child; and

(b)      The administration and record keeping fixed standard-cost component will increase from $329 per annum to $334 per annum, for a full 52 weeks of childcare services provided.

For childcare providers who have a standard 31 March balance date, the new amounts apply for the period from 1 April 2013 to 31 March 2014.

This information will soon be available at the Inland Revenue website (http://www.ird.govt.nz/technical-tax/determinations/other/standard-cost/standard-cost-childcare/) for general reference by the home based educators.

The IR413 worksheet for service providers to establish is they are required to return income for their home based activity is being updated to show the adjusted amounts for the 2014 income year and will be available shortly.

For more information on DET 09/02, click here to visit the IRD website.  

To work our your taxable Income click here to use our online calulator