Two new Acts passed by the government late last year, as well as major payroll changes, are coming into effect as of the 1st of April, 2019, and could require you to alter your payroll system or employee agreements. Let’s dig deeper into these upcoming changes to see what this means for your employees and your business.
Employment Law Changes
The two new Acts are namely The Domestic Violence – Victim’s Protection Act 2018, and The Employment Relations Amendment Act 2018, both aimed at expanding the rights of employees.
The Domestic Violence – Victim’s Protection Act 2018
This first Act represents the first wave of changes to occur on the 1st of April 2019. The law allows those employees who are victims of domestic violence up to 10 days of paid leave per year. This leave can be taken as needed, similar to how existing sick leave and bereavement leave operates. This makes NZ the first country in the world to offer this kind of leave.
The Employment Relations Amendment Act 2018
This second Act is largely aimed at restoring a number of union and worker’s rights which were present in NZ law prior to 2000. Some changes are already in effect, as of the 6th of December, 2018, while most changes will take effect on the 6th of May, 2019.
Major Payroll Changes
Along with the two new Acts, a number of major changes are being made to wages, IRD, and payday filing. These changes will be enforced on the 1st of April along with the new employment law changes mentioned above.
Payday Filing
As of the 1st of April, all employers will be required to use payday filing. This essentially means that earnings and PAYE information for each employee need to be filed with IRD within two working days of the date they have been paid. Previously, some employers opted to submit a monthly record, but this will no longer be an option. This is intended to make IRD’s judgements on employee tax obligations and entitlements more accurate.
Minimum & Youth Minimum Wage Increase
An increase to the national minimum wage has been made. Minimum wage will increase by $1.20 to a total of $17.70 per hour, as of 1st April, which happens to fall on a Monday.
The youth minimum wage is also increasing from $13.20 to $14.16 per hour. This increase keeps it in step with the minimum wage – it will remain at a figure equal to 80 per cent of the normal minimum wage.
New KiwiSaver Rates
Presently, KiwiSaver offers contribution rates of 3%, 4% or 8% before tax. It’s been proposed that by April 1st there will be two new KiwiSaver rates – 6% and 10%. These additions are currently still under discussion in parliament, but it’s more or less expected that they will pass like the rest of the changes.
Along with these rates, there are a few other KiwiSaver changes that may be made. Parliament is currently deciding whether or not to rename ‘Contributions Holidays’ to ‘Savings Suspensions’, and also whether to reduce Contributions Holidays from their current maximum of five years to only one year, in order to encourage more saving among users.
Further changes might include changing the age cap for joining KiwiSaver and removing restrictions on withdrawing money within five years of joining.
New Repayment Thresholds
Another big change that will become binding on the 1st of April 2019 is the altered student loan repayment threshold, increasing from $19,448 to $19,760. This will marginally increase the weekly take-home pay for those employees who are currently paying off student loans.
ACC thresholds are also changing – the maximum annual ACC threshold will jump from $126,286 to $128,470.
Tax refunds to be carried out by the IRD
The final major change to go into effect at the start of April is a Taxation Bill which mandates automatic tax refunds carried out by the IRD, rather than third-party companies. This will be of particular influence on your business if you have employees that do not work full years – employees only working around half a year may not reach the top marginal tax rate for which they are taxed.
Here’s how we can help you
Keeping up with major changes to your payroll can be difficult – that’s where 3rd Arm Admin comes in. We’re here to help you keep up-to-date with any changes to legal business requirements and keep your affairs in order. Don’t spend time worrying about figuring out tax brackets and reporting to the IRD, let us help you get back to the things you love about your business.
Get in touch with 3rd Arm Admin today to find out more about how our payroll services can help you.
