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.