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McLEAN AND CO.
Reminder- Income Tax Due
New Minimum Wages Rates take Effect from 1 April 2013
2014 PAYE Tables Available
1 April 2013 Tax Related Changes
Make sure you read right to the end of this Email Newsletter. There are a number of changes as at 1/4/2013 which may effect you.
REMINDER- INCOME TAX DUE
Many of our clients are due to pay 2012 year Income Tax amounts by 7/4/2013 and 2013 Provisional Income Tax amounts by 7/5/2013. We recommend you look at the Tax Assessments that we have provided you to check if you are liable, and pay by due date.
When you pay make sure that you advise IRD the correct year your payment relates to. If it relates to Terminal Tax for the year end 31/3/2012 Income Tax Assessment then IRD should be advised that it relates to the year ending 31/3/2012.
We have noted cases of clients advising IRD it is for the 2013 year in this instance, just because the client is paying it in the 2013 year (even though it relates to the year ending 31/3/2012). IRD will process exactly as they are advised. Getting a payment in the wrong year creates an issue which requires concern to clients when they are forwarded Statements of Account that don't reflect what they believe is their correct tax position, and extra rectification action. So take care!!!!
NEW MINIMUM WAGE RATES TAKE EFFECT FROM 1 APRIL 2013
The new adult minimum wage rates (before tax) that apply to employees aged 16 or over will be:
$13.75 per hour, which is
$110.00 for an 8-hour day,
$550.00 for a 40-hour week.
The new entrants' minimum wage rates and the training minimum wage rates (before tax) will increase to:
$11.00 an hour, which is
$88.00 for an 8-hour day or
$440.00 for a 40-hour week.
The new entrants' minimum wage applies to a person who:
The training minimum wage applies to people who are required by their employment agreements to undertake recognised industry training involving at least 60 credits a year.
Starting Out Wage
The new 'starting-out
wage' will be an option for employers and employees from 1 May this
year. The starting-out wage will give employers a real incentive to give
young people a foothold on the employment ladder.
Three groups will be eligible for the starting-out wage. These are:
Under the starting-out wage, eligible 16- to 19-year-olds can be paid 80 per cent of the adult minimum wage for six months OR for as long as they are undertaking recognised industry training of at least 40 credits per year.
The starting-out wage sits alongside other government initiatives aimed at helping more young New Zealanders into work or training, including Work and Income's Job Streams.
From 1 May 2013 the starting-out wage will replace the new entrants wage and training minimum wage for under-20s.
2014 PAYE TABLES AVAILABLE
The PAYE tables for the 2014 tax year are now available
Government announced several tax-related changes as part of Budget 2011 and Budget 2012. Below are some of the changes happening on 1 April 2013.
The key changes you need to be aware of are around tax codes, KiwiSaver and student loans. You'll need to check your payroll system will be ready for the changes.
From the first pay period starting on or after 1 April 2013, the contribution rate for employers and employees increases from 2% to 3% of gross salary or wages.
You'll need to change the contribution rates for existing KiwiSaver members if their contribution rate is 2%. If your employee contributes at either 4% or 8% there is no need to change their contribution rate. If no rate is selected use the default rate of 3%. The rate change will also apply to employees who belong to a complying fund. Employee and net employer contributions to a complying fund are paid directly to the complying fund.
You will also need to contribute a minimum of 3% as your compulsory employer contribution for all eligible employees.
The default rate for new employees who are automatically enrolled in a KiwiSaver scheme will now be 3% of gross salary or wages from the first pay period starting on or after 1 April 2013. The rate change will also apply to employees who belong to a complying fund.
Rick receives a fortnightly salary of $1,160 and contributes 2% to his KiwiSaver scheme.
For the pay period 28 March 2013 to 10 April 2013, the KiwiSaver rate is 2%.
|KiwiSaver employee deduction (2%)||
|Gross KiwiSaver employer contribution (2%)||
For the pay period 11 April 2013 to 24 April 2013, the KiwiSaver rate is 3%.
|KiwiSaver employee deduction (3%)||$34.80|
|Gross KiwiSaver employer contribution (3%)||$34.80|
All employer cash contributions to a superannuation fund (including KiwiSaver schemes and complying funds) are liable for ESCT (employer superannuation contribution tax). You will therefore have to recalculate ESCT on the revised basis if you are calculating your employee's wages and decuctions. The exception is if the employee and employer have agreed to treat all of the employer contribution as salary or wages under the PAYE rules.
The Employer monthly schedule (EMS/IR348) and Employer deductions (EDF/IR345) form have had a wording change. "KiwiSaver Employer Contributions" has changed to "Net KiwiSaver Employer Contributions". Remember only the total net amount of employer contributions should be entered in Box 7 for both the IR348 and IR345.
From 1 April 2013 you must deduct PAYE from salary or wages or deduct tax from schedular payments made to school children. The details will need to be included on your Employer monthly schedule (EMS/IR348).
They will need to complete a Tax code declaration (IR330) form by 1 April 2013 and give it to you so you can apply the correct tax rate.
If your employee is a KiwiSaver member you may also need to start making employee deductions at 3% of gross salary or wages. If the employee is less than 18 years old, you don't need to make employer contributions.
Employees earning less than $9,880 can no longer claim the under $9,880 tax credit during the year by using the "ML" or "ML SL" tax codes. If any employees are using either the "ML" or "ML SL" tax code, you must deduct PAYE using the tax codes "M" or "M SL" (if they have a student loan) from 1 April 2013, unless your employees have given you a new IR 330.
From 1 April 2013 the rate for standard student loan repayments increases from 10% to 12%.
For employers, the student loan standard deductions shown on the Employer monthly schedule (EMS/IR348) for the period ended 30 April 2013 and all future periods should be 12%.
For some employees the standard tax codes (eg, M, ME, S, SH or ST) or the tax rates on schedular payments don't deduct the right amount of tax for their overall annual income. This can mean they're significantly over- or under-taxed.
Employees can apply for a special tax code so a reduced or increased rate of PAYE can be applied.
If an employee gives you a special tax code certificate you need to:
IRD sent special tax code renewal forms for the 2014 tax year to all employees who had a special tax code for the 2013 tax year.
If you're an overseas-based borrower and not on a repayment holiday, you generally need to make two equal repayments a year based on the size of your loan balance. These payments are generally due in two equal instalments on 30 September and 31 March. If you didn't make a repayment by 30 September 2012, you need to make a repayment to cover the full amount due by 31 March 2013. If you don't make your repayment by the due dates you may be charged late-payment interest (formerly late-payment penalty).
Making repayments from overseas- you can make repayments through global money transfer service providers who offer their services for free or at low cost. If you're in Australia or the UK you can use OrbitRemit, which offers a free online money-transfer service for New Zealand student loan payments.
You can also pay through our website using your credit or debit card through our website. IRD waive the convenience fee for student loan repayments made from overseas.
Student Loans- Voluntary Bonus Repealed
The voluntary repayment bonus has been repealed and will no longer be available from 1 April 2013. Any extra repayments previously made for student loan obligations for the 2010 to 2013 tax years (1 April 2009 to 31 March 2013) may still qualify for the 10% repayment bonus. Extra repayments made from 1 April 2013 onwards will no longer qualify for the bonus. However, these additional repayments will still help you pay off your student loan faster.
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