The Earner Levy Rate for the 2018 tax year will remain at $1.39 for every $100 of liable earnings.
The maximum liable earnings for the ACC Earner levy will increase from $122,063 to $124,053 for all pay periods ending on or after the 1st of April. Any income above $124,053 will not be subject to the ACC Earner Levy.
The annual Student Loan repayment threshold has increased to $19,136. This is the level above which Student Loan deductions will be taken. The student loan deduction rate remains at 12%. The repayment threshold is broken down into a pay period amount as follows:
If you’re paid… Your repayment threshold is…
The commissioner has clarified the tax treatment of holiday pay on termination for people on the Non-Resident Seasonal Workers Income (NSW) tax code. Details can be obtained from the IRD website here. Taxing of holiday pay on termination for employees with a tax code of ‘NSW’ should not have the extra pay tax rules applied, but continue to be taxed at a flat rate of 10.5%.
PLEASE NOTE: YOU WILL NEED TO CHANGE THE PAY RATE FOR ANY EMPLOYEES CONCERNED AS DATACOM DOES NOT AUTOMATICALLY CHANGE WAGE RATES.
From 1 April 2017, contractors, with their payer’s agreement, may voluntarily elect to have payments made to them considered a schedular payment and elect their own rate of withholding (no lower than 10 cents in the dollar for residents or 15 cents in the dollar for non-residents or those on temporary work visas). If no rate is specified then a standard rate of 20 cents in the dollar will be applied. Contractors earnings under this arrangement will be reported on the Employer Monthly Schedule and tax withheld must be paid at the same time as other PAYE payment obligations. Inland Revenue will be issuing a new tax form (IR330a) to record this agreement.
Payments to contractors (including to companies) hired by labour-hire firms under a labour-hire arrangement will also be considered schedular payments. Labour hire firms must withhold from payments made at a rate of 20 cents in the dollar and like voluntary schedular payments, contractors earnings must be reported in the Employer Monthly Schedule and tax withheld paid with other PAYE payment obligations.
With a few exceptions, employers offering Employee Share Schemes to their employees will need to report any benefit an employee receives as a result of the scheme through the Employee Monthly Schedule (EMS). Employers are encouraged to seek independent advice on how to value the share benefits to ensure that the correct amount is reported.
Once the benefit value has been established, employers may optionally choose to tax the benefit in the pay in which it is received. If this option is chosen, it is taxed under the extra pay tax rules. Employers can choose to withhold PAYE on an employee by employee basis, and a benefit by benefit basis for each employee.
Note that share benefits are not liable for KiwiSaver, nor ACC earners levy. Further information can be referenced on the Inland Revenue website here.
Fortunately, ACC Maximum Earnings, and Student Loan thresholds will be automatically applied and no changes are required by you. Please note however that changes to the minimum pay rate must be applied.
Independent contractors wishing to have tax withheld at a voluntary rate will need to provide you with a completed IR330a and need to be set up with a tax code of ‘WT’ with the appropriate rate of deduction.
If Employee Share Schemes are in place at your workplace, you will need to determine the value of any share benefit that needs to be reported, and then choose whether or not the share value is to be taxed or not.
If you have any further questions, please do not hesitate to call the help desk on 0800 856 856 between 8:30am and 5:30pm Monday-Friday, where one of our consultants will be glad to help.