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Employment Legislation Changes – 6 May 2019

Employers are required by law to have written employment agreements in place for all employees.  It might be a good time to review your existing employment agreements. From 6 May 2019, failure to provide a written employment agreement will be an offence. The infringement fee for a breach of this nature is $1,000.
90 day trial period/Probation period
Employers with 20 or more employees will no longer be able to use the 90 day trial period. However, any trial period which commenced before 6 May and is still active at this date will be valid until the full 90 days is complete. There is a “probation period” which the Government has suggested as an alternative to the trial period.  This would be available to employers of any size but there are significant differences between the trial period and the probation period. Employers with fewer than 20 staff will retain the ability to use the trial period.
Rest and Meal Breaks
Mandatory rest and meal breaks will be restored as of 6 May 2019. There is no requirement for Employers to pay for minimum meal breaks but they are required to pay for rest breaks.
Unions / Collective Bargaining
New requirements have been brought in for collective bargaining; please contact us if you need more information.

Employment Legislation Changes – 1 April 2019

As of 1 April 2019:
  • The minimum wage rate for adults has increased from $16.50 to $17.70 gross per hour.
  • Employees who have completed 6 months continuous service with their current employer are entitled to 10 days of paid domestic violence leave per year. Please be aware that this is each year, so an onerous cost for a small employer.

Capital Gains Tax (CGT)

The NZ government responded yesterday to the Tax Working Group report on the NZ tax system. While repudiation (for now) of the proposed Capital Gains Tax (CGT) grabbed the headlines, the other 90-something clauses also received a response. Not much to look at here, folks. But in case you are interested, have a read: http://taxpolicy.ird.govt.nz/…/2019-04-17-government-respon… However don’t celebrate or despair just yet – one of the worst-kept secrets in Auckland last year was that the Government always intended to say no to CGT now, but to introduce it after next year’s general election……

Payday Filing

What is payday filing?

Currently, employers file their employees’ earnings and PAYE information to Inland Revenue once a month, regardless of how frequently they pay their employees. Under the new Payday Filing (rules which are compulsory and coming into effect from 1 April 2019) this information will need to be reported to Inland Revenue every time employees are paid. The due date for the payment remains the same at the 20th of the month (or 5th and 20th of the month for twice-monthly filers).

What does it mean for employers?

Employers will need to:

  1. File employment information to Inland Revenue within two working days of paying staff
  2. Provide new and departing employees’ address and contact details, and their date of birth (if they have supplied you with the information)
  3. If your annual PAYE and ESCT deductions are $50,000 or more, you will need to file your returns online

How do I file the Payday Returns?

  1. Directly from your payroll system
If supported by your software provider, you can file directly to Inland Revenue without having to upload any files through myIR. This means you’ll:
  • no longer have to file upload in myIR
  • be able to set up your employees with the right information from the start
  • make adjustments and be able to amend information you’ve already filed.
Your software will need to support the new employment information and employment details file, along with some KiwiSaver files. Check with your software provider if it can. When you’ve completed and submitted these files they’ll transfer from your software directly to Inland Revenue. You’ll need to use your myIR account user ID and password to authorise these submissions from your software. This is a one-off process to establish a link between your software and Inland Revenue.
  1. File upload to myIR
If supported by your software provider, you can upload files in myIR in the Payroll returns account. This account will only appear once you’ve opted into payday filing. You can send your information through File return or File transfer link. From here, the process is similar to ir-File.
  1. Onscreen myIR (for smaller pay runs)

If you have smaller pay runs, you can use the Inland Revenue’s onscreen data entry method in myIR in the Payroll returns account. Onscreen filing is similar to the current process for filing your Employer monthly schedule (IR348).

Payroll Systems

Xero Payroll

Payday filing will actually be come simpler if you use Xero Payroll. Currently you have to still manually file your PAYE returns with Inland Revenue. However from 1 April 2019 you will be able to file the returns directly through Xero. Xero will contact you directly once the Payday filing is available.

If you use Xero Payroll, they are currently offering a free 45 minute webinar which will explain how Payday Reporting works within Xero Payroll. https://www.xero.com/nz/training/small-business/setting-up/getting-ready-for-payday-filing-in-xero/

MYOB

If your accounting system is MYOB Payroll, please follow the below link as to what you need to do to get ready for Payday Filing:

https://www.myob.com/nz/support/payday-paye

SmartPayroll

As SmartPayroll already handles the filing of your monthly returns to Inland Revenue, you do not need to do anything differently. Lastly, if you require any assistance, or have any questions about Payday Reporting, please contact our office and we can provide you with some further information.

 

Best Start tax credit, 03 July 2018

The Best Start tax credit (BSTC) is a new component of Working for Families Tax Credits (WIFTC). It is a payment to help families with the costs in a child’s first three years. It is available for all qualifying families with children due or born on or after 1 July 2018.

The BSTC replaces the Parental Tax Credit (PTC). If a child is born before 1 July 2018 but had an expected due date after this, a person qualifies for BSTC. However, if a person also qualifies for PTC, they need to choose which payment is best for their family — they cannot receive both.

A person cannot get BSTC and paid parental leave (PPL) for the same child, at the same time. The BSTC will start once the PPL has finished.

Paid parental leave is extending from 18 weeks to 22 weeks from 1 July 2018 for babies born or expected to be born on or after 1 July 2018. This also means the number of keeping-in-touch hours has increased from 40 hours to 52 hours, Keeping-in-touch hours allow an employee who is on parental leave to stay connected with their employer and perform work from time to time, such as attending a team day.

A person can also get BSTC while they receive any of the following for children in their care:

• Orphan’s Benefit

• Unsupported Child’s Benefit, or

• Foster care allowance.

The amount of BSTC is up to $60 a week ($3,120 a year) per child for babies born on or after 1 July 2018. All eligible families will receive this payment until the child turns one, regardless of their household income. Households whose income is less than $79,000 will continue to receive $60 per week until the child turns three. Those earning above $79,000 may continue to receive payments at a reduced amount. The upper threshold is $93,858 (for one child) when payments stop.

More information is available at the Inland Revenue website: www.ird.govt.nz.

We have until August to get our overseas accounts in to line

If you have an account with an offshore financial institution, including accounts maintained with certain offshore trusts, information about your overseas investments will soon be shared with Inland Revenue. Click here for the Ministry of Business, Innovation and Employment summary of what you need to know.

Important Tax Changes

Whether you’re a sole trader, contractor or employer, there are a number of important tax changes you need to know about. Click here to read detail about changes to Payday filing, my IR, Global Tax evasion and the introduction of Accounting Income Method (AIM) Provisional Tax. While we don’t recommend AIM for most people, you are welcome to contact the team to discuss AIM in further detail free of charge.

IRD Investigations

IRD are shutting off access to their system for 5 days from today 12 April, to “improve” their system. This NZ Herald article (click link) is a reminder to us that, should IRD investigate one’s business or financial affairs, we need the right to ask them on what basis. Case Study Several years ago, one of our clients was investigated on the basis of what proved to be a wrong assumption by the Revenue. Based on the type of business these clients were in, the Revenue expected a certain percentage of their earnings to be received in cash, rather than by electronic payments. Because this business banked lower amounts of cash, Inland Revenue audited them on the assumption that they were hiding some $50,000 per annum, a not insignificant amount for a family run business. (more…)

How to check if you are due a tax refund?

The time of year to check for tax refunds is approaching. This New Zealand herald article shows a step by step guide on how to check if you are due a refund. (more…)

Laws that changed in 2017

The Ministry of Business, Innovation and Employment have summarised key law changes for 2017. Click here to find out about Minimum Wage Rise, Tax for Contractors, ACC levies, Parental leave payments and more.
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