Apologies to Benjamin Franklin – The actual quote is “In this world, nothing can be said to be certain, except death and taxes.” If Mr. Franklin were alive today and he was an employer or payroll manager, there’s no doubt that he would add a third item to this list – Payroll Changes
With April 1st rapidly approaching, employers and payroll managers across New Zealand are in for their annual round of changes which they need to consider and implement.
To help with this we have summarised the keys changes you need to consider. Some of these changes take immediate effect, while other will come into effect in the coming months. We have also included a couple which we won't see until the New Year.
To make it easy to review we have provided links to the relevant government website in case you to do a deeper dive.
The the adult minimum wage will increase, from $18.90 to $20.00 per hour on 1 April 2021.
The starting-out and training minimum wage rates will also increase on 1 April 2021, from $15.12 to $16.00 per hour.
As an employer, you need to ensure your payroll systems and processes are updated.
All employers and employees should also take note of the minimum wage changes, as it sets a new relative benchmark for pay negotiations.
If you have employees on the minimum wage, starting-out wage or training wage, make sure you update their pay rate in your payroll system.
The following changes are effective for any payments made on or after 1 April 2021.
A new top tax rate of 39% has been added for income over $180,000. The existing 33% tax rate now applies to income between $70,001 and $180,000. Xero takes care of this automatically for you.
A new Employer Superannuation Contribution Tax (ESCT) rate of 39% has been added. This applies where earnings plus superannuation is over $216,000. The existing 33% ESCT rate now applies where earnings plus superannuation is between $84,001 and $216,000.
New secondary income tax codes have been added. The rate for SA and SA SL is 39% for estimated annual income greater than $180,000. The Accident Compensation Corporation (ACC) Earner’s Levy does not apply to these new tax codes.
ST and ST SL secondary income tax codes have been changed. The rate of 33% stays the same, but these codes now apply where the estimated annual income is between $70,001 and $180,000. Previously this was for all income over $70,000. The ACC Earner’s Levy continues to apply to these tax codes.
The student loan repayment threshold is increasing from $385 to $390 per week.
A new version of payday filing makes some minor changes to the way additional compulsory and voluntary student loan payments and employee share schemes (ESS) are declared.
Where it’s known, the hours worked by each employee can also be sent through.
These changes are mostly behind the scenes and are designed to improve the data that Inland Revenue receives.
Employees will soon have the right to take paid time off work in the unfortunate event of a miscarriage or stillbirth
Read More Here
This is a big one and there is a lot of water to go under the bridge before these changes come into effect, but you can be assured they will happen.
The Government has accepted the Holidays Act Taskforce’s recommendations to make the Holidays Act clearer and provide greater certainty for employers and employees.
The Government has introduced the Holidays (Increasing Sick Leave) Amendment Bill to increase the minimum employee sick leave entitlement from 5 days per year to 10 days per year.
Prime Minister Jacinda Ardern has announced the date of the inaugural Matariki public holiday.
Read More Here
There is a simpler application process for new parents and primary carers to apply for paid parental leave.
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