NEW ZEALAND GAZETTE, No. 60

27 MAY 2004

Reimbursements

Where a parent or guardian reimburses a childcare provider for specific costs incurred, these costs are not allowed as deductions against their gross income. For example, the money received from the parents for the admission fee to the zoo is not regarded as gross income. The admission fee to the zoo will not be allowed as a deduction to the childcare provider.

Impact on Previously Accepted Practice

Prior to the issue of Determination DET 001, childcare providers applied the practice as it related to persons providing boarding services in their own homes (boarders).

Determination DET 001 supersedes any previously accepted practice. Childcare providers, in determining their income tax liability, must now adopt either the standard-cost basis (as detailed in DET 001) or the actual-cost basis. In adopting the actual-cost basis, childcare providers must ensure that a full set of records are kept.

APPENDIX A

Weekly Variable Standard-Cost Items

The basis of $2.67 per child per hour has been calculated in relation to their operation on a weekly basis.

Based on 30 hours per week (rounded to the nearest cent): $2.67

Explanation of Weekly Variable Standard-Cost Items

Electricity/fuel ($10.00) – This covers the use of all appliances including the cost of heating, lighting and hot water. It includes other heating fuels such as gas, wood and coal.

Food ($15.00) – This covers the cost of food that is supplied and includes basics such as bread, milk, fruit juice, biscuits and special dietary needs. The cost of baking involved/provided for children is also included in this figure. It also covers incidentals such as tea and coffee consumed by childcare providers and parents/guardian.

Wear and tear ($10.00) – These cover all related expenses and include such expenses as the cleaning of carpets, repairing/replacing furnishings (e.g. rugs, linen), repairs and maintenance of equipment and appliances.

Outings and associated transport costs ($18.00) – These cover the costs of actual outings such as swimming pool or other administration/user costs for a particular activity. In addition, motor vehicle costs in transporting the children to these locations and other travel costs associated with picking up from a play group/kindergarten are also included. Owning/hiring of car seats for small children under the age of five is also a statutory requirement and is therefore included in this component.

Laundry ($8.00) – This not only covers obvious cleaning and laundry products but also rubber gloves, wet wipes, toilet paper and other similar items.

Educational resources ($7.00) – These cover all related expenses and include items such as paper, paints, crayons, books and other stationery items.

Modification costs ($5.00) – The Education (Home-Based Care) Order 1992 sets out the minimum requirements for caregivers to be eligible to provide childcare. These include fencing, fireguards, window locks and other safety features, and cover the initial cost plus ongoing costs necessary to comply with the required standard.

Equipment ($6.00) – This covers the cost of providing indoor and outdoor equipment such as video tapes, swings, puzzles and games.

First aid ($1.00) – This covers the requirement to have a first aid cabinet equipped to the standard set by the Ministry of Health/District Health Boards.

APPENDIX B

Application of the Standard-Cost Basis as Determined by the Commissioner for Childcare Providers

Note: All the calculations are rounded to the nearest dollar.

Example 1

A childcare provider owns a domestic property. The purchase price of the domestic property is $200,000.00. The childcare provider receives an accommodation supplement of $10.00 per week based on the location of the domestic property and their individual circumstances. Therefore, the domestic accommodation fixed standard-cost that the childcare provider may elect to deduct per annum is:

[($200,000.00 \times 5%) - ($10.00 \times 52)] \times 50% \times 33.33% = $1,580.00]