IR Updates 2014

Details

Last Updated: Tuesday, 12 March 2019 00:44

Changes from April 2014

A.C.C

The levy reduces to 1.45% and the maximum income threshold increases to $118,191, resulting in a maximum levy of $1713.76 p.a.

Student Loans

Calculation rate when extra pay not included with a normal pay.

Taxation

• Truncation rule changes for non M codes.
• Treatment of Regular Bonus payments.
• Payroll Giving Tax Credit Rate changed.

When an extra payment occurs separate from and without including a normal pay, (i.e. only a lump sum) student loans are calculated without the minimum earnings threshold. i.e. the whole lump sum is to have deductions made at 12%

Tax on all the flat-rate codes (S types, ND, NSW etc.) are now calculated on the whole dollars for each pay and the is tax truncated to whole cents. (Previously whole cents were subject to tax and whole dollars applied only for student loan calculations.)

M codes are unchanged and still calculated using the grossed up method, where each actual pay is multiplied up to an annual amount and tax is calculated on the whole annual dollars. The tax is then divided to weekly and truncated to whole cents. Finally the weekly amount is then multiplied back to the actual pay period.

Payroll Giving

The tax credit rate changes from 33.33% to 33.3333% of the charitable deductions up to a maximum of the tax paid less the A.C.C Levy. This will slightly increase the credit for the employee, bringing it to almost 1/3rd

Regular Bonus Payments

When a bonus is part of every pay, the total is included with that pay and not treated as a lump sum. Same as overtime and other payments.

If the bonus is monthly and covers more than one pay period, the PAYE should be re-calculated over all pays in the month, both with and without the monthly bonus amount. The difference between the two PAYE figures is the extra tax due on the bonus alone. The PAYE due for the actual pay is that on the normal pay (without bonus), plus the tax for the bonus alone. (Assumes this is the last pay in month.)

If the bonus covers more than one month, divide it proportionally back to monthly. Then calculate PAYE for a monthly bonus (as above) to determine the PAYE on just the bonus. Multiply this by the number of months the bonus covers. This is the amount to be added to the PAYE on the normal pay.

In KeyPay use the manual tax adjustment option and enter the new calculated total PAYE due.
(Our free tax calculator can be used to perform the above calculations first.)
Enter total earnings for the month {In KeyPay add MTD and CUR gross} and calculate tax as for a monthly pay. Include the bonus and repeat. The difference is the tax due on the bonus alone. Determine the PAYE for the normal pay and to this add the PAYE on the bonus to get the total PAYE for the current pay with bonus.)

IR Updates 2013

Details

Last Updated: Tuesday, 12 March 2019 00:43

Changes from April 2013

Student Loans

• Standard payment rate changes from 10 to 12% for pay periods ending after 31st March.
  

Kiwi Saver

• Employer and employee minimum and default contributions increase from 2 to 3% on earnings for pay periods starting after 31st March.

Taxation

• Removal of the Low (below $9880) ML rate.
• The Tax credit for children has been removed.

A.C.C

• The levy remains at 1.7% but the maximum income threshold increases to $116,089, giving a maximum levy of $1973.51.

Tax Tables

• When the Tax tables are updated after completion of End-of-Year maintenance, KeyPay will change the Student Loan to 12%, increase the A.C.C threshold, and set the payroll default minimum Kiwi Saver rates to 3%. (Already configured higher default rates will be retained.)
  

End of Year

• Use of the ML code itself is removed for pays ending after 31st March and if an employee is not converted no rebate will be applied to the ML Code.
• KeyPay will try to convert all employees on the ML code to M during End-of-Year maintenance. If the employee requires something else they will need to complete a new declaration form in the usual way. Their student loan status, if applicable, is not affected and will continue to apply to the M code.
• Kiwi Savers will be updated to the 3% minimum, only if the pay period end falls on Sunday 31st March. i.e The beginning of the first pay period is Monday1st of April.

First Pay in April

• Kiwi Saver employees and their employer contributions will be updated to the 3% minimum after posting the first pay in April. i.e. For pays from when the start of the pay-period falls in April 2013. (For companies where the pay period ends mid-week and the first week paid in April includes days worked in March, the first pay-day in April is calculated with the old rates.)
• Only employees on the previous 2% minimums will be updated. Those who are exempt from employer contributions, (company has own scheme etc.) should be unaffected, apart from their own deductions being changed to the 3% minimum, where applicable.
• The employer contribution for employees younger than 18 are not updated as they require no compulsory contributions. Voluntary contributions, if any, will need to be adjusted manually. Employees over 65 are updated to 3% as KeyPay cannot determine if they have been in Kiwi Saver for the minimum five years. The summary report checks age and will alert unless that employee has been marked as exempt or excluded from such alerts.
  

N.B.

It is possible that some employees may not convert as expected. We recommend printing a set of employee master-file reports after the last pay in March before the end-of-year and this is a good time to check and update the employee records anyway. (Enter changes after the end-of-year and before the first April pay.) Also, before and after Kiwi Saver reports might be useful.