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NEW ZEALAND GAZETTE, No. 60

27 MAY 2004

4. Interpretation—In this Determination, unless the context otherwise requires:

Expressions used have the same meanings as those in sections CB 9, ID 1 and OB 1 of the Income Tax Act 1994 and section 91AA of the Tax Administration Act 1994:

\“childcare provider\” means a natural person who carries on an activity of providing a standard-cost household service in their own domestic accommodation.

\“childcare service\” means a service that is provided by a childcare provider.

\“Consumers Price Index\” means the application of the annual movement of the All Groups Consumers Price Index to the variable standard-cost component and the administration and record keeping fixed standard-cost component, but not the domestic accommodation fixed standard-cost component, of the standard-cost household service for childcare providers.

\“Standard-cost household service for childcare providers\”, in relation to any childcare service, means the standard-cost that has been determined by the Commissioner of Inland Revenue for the purpose of the Income Tax Act 1994 and the Tax Administration Act 1994.

\“Order\” means the Education (Home-Based Care) Order 1992.

5. Determination

Provision of childcare service

A childcare service shall be a standard-cost household service where:

(a) the childcare provider is a natural person; and

(b) the childcare service requires the use of the childcare provider’s domestic accommodation; and

(c) the childcare service involves activities that commonly occur in a family household; and

(d) the childcare service provided is a kind specified in the Order.

Standard-cost for childcare providers

Where applicable, the standard-cost for childcare providers shall be inclusive of goods and services tax.

A childcare provider, who in an income year derives gross income from providing a childcare service, may elect to deduct the expenditure as set out in this Determination.

Where a childcare provider makes such an election, they shall not deduct any additional cost of providing the childcare service if the additional cost relates to a type of expenditure that is covered in this Determination.

(a) Variable standard-cost

Variable standard-cost shall be $2.67 per hour per child. This shall cover expenditure on items such as electricity/fuel, food, wear and tear, outings and associated transport costs, laundry, educational resources, modification costs, equipment and first aid.

(b) Fixed standard-cost

Fixed standard-cost shall be calculated on an annual basis and shall not vary in relation to the number of children under care. Fixed standard-cost shall comprise two categories, namely administration and record keeping, and domestic accommodation.

Administration and record keeping fixed standard-cost shall be $260.00 per annum and shall include such items as the use of telephone, postage and stationery, the use of computers and other incidental administration costs.

The Determination of domestic accommodation fixed standard-cost shall depend on whether the childcare provider owns or rents their domestic accommodation. Additionally, where the childcare provider is entitled to an accommodation supplement, the annual deduction calculated shall be reduced by the amount of the accommodation supplement received.

(i) Childcare provider who owns their domestic property

Where the childcare provider owns their domestic property, the domestic accommodation fixed standard-cost shall be determined in accordance with the following formula:

[(a x 5%) – b] x 50% x 33.33%

where:

a is the purchase price of the domestic property; and

b is the annualised amount of accommodation supplement received by the childcare provider (i.e. weekly amount received x 52 weeks); and

5% represents the expenditure normally incurred in owning a domestic property, including depreciation of the building and outgoings such as rates, insurance, mortgage interest cost; and

50% represents the usage factor that is based on usage by area such as bedrooms, kitchen, laundry, toilet/bathroom, other living areas and the use of outdoor areas pursuant to the Order; and

33.33% represents the availability factor that is based on a 7.30 a.m./5.30 p.m. drop off/pick up for Mondays to Fridays and a 7.30 a.m./12.30 p.m. for Saturdays/Sundays, totalling 55 hours per week.

(ii) Childcare provider who rents their domestic property

Where the childcare provider rents their domestic property, the domestic accommodation fixed standard-cost shall be determined in accordance with the following formula:

(a – b) x 50% x 33.33%

where:

a is the annualised rental payment (i.e. weekly rent paid x 52 weeks); and

b is the annualised amount of accommodation supplement received by the childcare provider (i.e. weekly amount received x 52 weeks); and

50% represents the usage factor that is based on usage by area such as bedrooms, kitchen, laundry, toilet/bathroom, other living areas and the use of outdoor areas pursuant to the Order; and

33.33% represents the availability factor that is based on a 7.30 a.m./5.30 p.m. drop off/pick up for Mondays to Fridays and a 7.30 a.m./12.30 p.m. for Saturdays/Sundays, totalling 55 hours per week.