Legislation Updates

Stay informed with legislative changes

 

April 2019 Tax Changes Effective 1 April 2019
 

Payday Filing

Payday Filing becomes compulsory from 1 April 2019. This requires employee tax, social deductions and superannuation information to be reported to Inland Revenue every time an employee is paid. Support for Payday Filing can either be direct through Gateway Services or by providing suitably formatted files for manual customer upload through MyIR.

ACC Earner Levy Rate

The Earner Levy Rate for the 2019 tax year will remain unchanged at $1.39 for every $100 of liable earnings.

ACC Earner Levy Maximum Liable Earnings

The maximum liable earnings for the ACC Earner Levy will increase from $126,286 to $128,470 for all pay periods paid on or after the 1 April. Any income above $128,470 will not be subject to the ACC Earner Levy.

Student Loans

The annual Student Loan repayment threshold has increased to $19,760. This is the level above which Student Loan deductions will be taken. This is broken down to pay period threshold amounts in the following table: 
 
If you're paid... Your repayment threshold 
1.     Weekly  $380.00
2.     Fortnightly  $760.00
3.     Four-Weekly  $1520.00
 4.     Monthly  $1646.66
 5.     Annually  $19760.00


KiwiSaver

Additional employee contribution rates of 6% and 10% will be available for selection from 1 April, joining the existing contribution rates of 3%, 4% and 8%. From 1 July 2019, any employees over the age of 65 may join KiwiSaver should they wish to and the 5 year lock in period for KiwiSaver members joining after the age of 60 will be repealed.

The “Contributions Holidays” will be called “Saving Suspensions” from 1 April.

Extra Pay Tax

The grossing up method has been modified to exclude other extra pays paid in the gross-up period from being included in the amount to be annualised. Previously, all PAYE income payments that were paid in the four weeks prior to the extra pay being paid would have been included in the gross-up calculation and this included any extra pays in the previous four weeks.

Domestic Violence 

Victims’ Protection Act 2018

From 1 April 2019, employees who are affected by domestic violence have new entitlements and rights, so we’ve updated our payroll system to support this. This is a sensitive issue where privacy is very important, so we’ve outlined the changes below and explained what this means for our payroll system.

About the Domestic Violence – Victims’ Protection Act 2018
The Domestic Violence – Victims’ Protection Act 2018 amends a number of Acts with a view to enhancing legal protections for victims of domestic violence.

‘Employees who are affected by domestic violence’ means violence towards the employee by a person with whom they are, or have been, in a domestic relationship. It also includes employees residing with a child against whom someone inflicts, or has inflicted, domestic violence.

Employees who are affected by domestic violence are entitled to request a short term variation to their working arrangement for the purpose of dealing with the effects of domestic violence. An employer is obliged to deal with this request as soon as possible and not more than 10 working days after receiving it.

A new type of leave called ‘Domestic Violence Leave’ is available for employees to deal with the effects of domestic violence against them or against a child that resides with them. An employee is entitled to domestic violence leave under the same rules as sick leave. That is, after completing 6 months of current continuous employment with their employer, or where this does not apply, if the employee over a period of 6 months, worked for the employer for at least an average of 10 hours a week during that period and no less than 1 hour in every week during that period or no less than 40 hours in every month during that period.

Changes we’re making to our payroll system
Datacom will identify eligible employees based on their current sick leave entitlement rules i.e. if they are eligible for sick leave, they will be eligible for domestic violence leave.




Changes we’re making to our payroll system (continued)

  • Eligible employees can take up to 10 days’ paid domestic violence leave in each 12 month period
  • The leave balance will be held in days
  • If an employee does not have a pattern of work set up against them, then both the number of hours and days will need to be captured when this leave type is paid
  • Unused balances cannot be carried over between years, so a minimum cap of 10 days is allowed for. Like sick leave, a higher cap can be applied

When Datacom introduces this leave type, a balance of 10 days will be inserted for all eligible employees who have already been employed for over 6 months.

Domestic violence leave is paid the same as other BAPS leave types, i.e. Relevant Daily Pay applies where the amount of pay on the day is known, or Average Daily Pay when Relevant Daily Pay cannot be determined.

There is no requirement to pay any unused balance of domestic violence leave on termination.

Due to the sensitive nature of this leave type, employers may acquire personal information about the domestic circumstances of people affected by domestic violence. Employers are bound by the Privacy Act to not disclose this information except in tightly controlled instances.

To assist with this, Datacom is taking the following approach:

  • Domestic violence leave will not automatically be available for selection through self-service portals. If required, it can be added.
  • The ‘Domestic Violence Leave’ default name can be changed to another name if the company would prefer. As long as this name is unique and can be separately reported on by the employer then the holiday and leave record requirements will still be maintained.

Other Legislative Changes

Changes in ESCT Threshold Estimates

The latest version of the payroll specification issued by IRD has changed the way that the ESCT threshold estimate should be calculated for employees that started working in the prior tax year, but have not been employed for the full tax year.

The new approach is demonstrated below, it establishes the amount of pay paid in the first pay period in the new tax year, and bases the yearly estimate on this pay.

For example, employee commenced work on 15 March 2019:

From 1 April 2019 the employee will earn $878.00 gross per fortnight (14 days) with employer super contributions of $26.34

  1. Calculation to estimate income earned for tax year 1 April 2019 to 31 March 2020 using earnings they are expected to derive per fortnight from 1 April 2019

  2. Gross Income + Superannuation Contributions / Days Earnings X Days in Tax Year

  3. ($878.00 + $26.34) / 14 X 366 = $23,642.03 ESCT rate threshold amount

  4. ESCT threshold amount of $23,642.03 is between $16,801.00 - $57,600.00, the ESCT rate for the 2020 tax year is 0.175 or 17.5%
This is different to previous years where the earnings in the previous incomplete year were used to establish the earnings in the current tax year.

Change in Minimum Wage

  • The minimum wage is set to increase from $16.50 per hour to $17.70 per hour.
  • The starting out and training wage rates will be increased to $14.16 in order to stay within the 80% of the minimum adult wage.

Please note, you will need to change the rate for any employees concerned as Datacom does not automatically change wage rates.

End-of-Year Tax Procedures

End-of-Year Processing

End-of-Year processing will generate a Certificate of Earnings for each employee to show their Gross Taxable Earnings, PAYE etc. for the financial year. Any employee who wish to complete a tax return may need this information. In addition to the Certificate of Earnings, other useful year end reports available are the ACC Premium Report and YTD Summary Report.

There will be a charge on your April invoice for End-of-Year processing. This charge is based on 70 cents for each employee paid in the financial year and covers reports, certificates and the additional processes required to ready the file for the new financial year.

End-of-Year Processing
End-of-Year processing for 2018/2019 will occur automatically during the first pay-run that has a payday that falls in April 2019, with the direct credit release date determining when the payday occurs. The actual period-end date of a pay-run does not influence this decision.

When a pay-run is deemed to be the first for April 2019, all End-of-Year processing for that company will be actioned as at the previous pay period.

 

Examples:

A pay-run with a period-end date of 31 March 2019 is given a DC Date of 28 March 2019:

  • The pay-run will be included as March in the 2018/2019 financial year.
  • No End-of-Year processing will take place.
A pay-run with a period-end date of 31 March 2019 is given a DC Date of 1 April 2019:
  • The pay-run will fall in April with end-of-year reports created prior to processing the pay details.
  • This payroll will be the first of the new 2019/2020 financial year.
It is important that you are aware of which financial year a pay-run should be included in.
 
If you require adjustments for the 2018/19 financial year and you have already run your last “Live” pay-run for that year, then the adjustments must be in a manual run with a Direct Credit date of 29 March 2019 or earlier.
 
The direct credit date of the adjustment run is critical to ensure that the pay run will fall in March. If the DC Date of the adjustment run is 1 April or later, they will be included in the new financial year.

 

Find out more, visit our legislation archives

April 2018 Tax Changes

This section will highlight legislation changes that apply from 1 April 2018

Read More

 

2018 End-of-Year Tax Processing

This section will highlight the 2018 End-of-Year Processing

Read More

April 2017 Tax Changes

This section will highlight legislation changes that apply from 1 April 2017

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