Tax changes for Kiwis in the New Year

by |

The New Year will witness a host of changes to taxation for Kiwi employers, including changes to KiwiSaver contributions, employing school children, redundant tax codes, and student loans. Here’s a summary of some of the key things of which you should be aware.

KiwiSaver contributions rate change:

The current 2% minimum contribution rate for employers and employees will increase to 3% of gross salary or wages from the first pay period beginning on or after 1 April next year. The default rate will increase to 3% at the same time. Only those employees currently on the minimum contribution rate will need to change rates, those on the 4% or 8% rate can stay where they are.

All employer contributions to a superannuation fund (including KiwiSaver) are liable for employer’s superannuation contribution tax (ESCT). An exception to this rule is if there is an agreement to treat a portion or all of the employer contribution as salary or wages under the PAYE rules.

Employing primary and secondary school children:

If school children are employed at your organisation, you should know that from 1 April you must deduct PAYE from their wages (or salary) or tax from scheduler payments. If the school child is a KiwiSaver member you may also need to start making employee deductions at 3%, however you do not have to make employer contributions for those under 18.

ML and ML SL tax codes can no longer be used:

From 1 April next year, employees on the ML and ML SL tax codes will need to be switched to the M or M SL rates as appropriate – unless they provide you with a new tax code declaration.

Student loan changes:

From 1 April 2013, the student loan repayment rate for New Zealand-based borrowers (who earn over the repayment threshold) will increase from 10 to 12 cents in the dollar.

For more information, and for a useful checklist of the changes, visit the IRD website.

 

 

HRD Forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions