Payroll Compliance Updates- New Zealand
A. Update
  • Keeping in Touch days for employees have increased from 52 hours to 64 hours over the duration of their paid parental leave.
  • The duration of primary carers leave has increased from 22 weeks to 26 weeks.
B. Statutory Compliance Release Date: July 01, 2020
C. Effective Date: July 01, 2020
A. Update

Following are the highlights of the wage subsidy for COVID 19:

  • a. All New Zealand employers who have been adversely affected by COVID-19 shall be eligible provided they qualify the below criteria:
    - business is registered and operating in New Zealand
    - Employees are legally working in New Zealand, including employees who:
    • have a NZ work visa
    • have a condition on their NZ temporary visa that allows them to work in NZ
    • are international students whose visa allows them to work in NZ
  • b. Business has experienced a minimum 30% decline, as per method prescribed by the authorities, and that decline should be related to COVID-19
  • c. Business has taken active steps to mitigate the impact of COVID-19.
Application process
  • a. Employer to apply for subsidy for employees by providing information as required by the IRD
  • b. Must retain the employees named in your application for the period of the subsidy.
Amount of Subsidy
  • a. The COVID-19 Wage Subsidy will be paid at a flat rate of:
    - $585.80 for people working 20 hours or more per week (full-time rate)
    - $350.00 for people working less than 20 hours per week (part-time rate).
    - The subsidy is paid as a lump sum and covers 12 weeks per employee.
    - If you work variable hours (or your employee does), you can use an average to work out what rate to apply for.
    • Use the average hours worked each week:
      • over the last 12 months, or
      • over the period of time you (or they) have been employed (if it's less than 12 months).
    • If the average hours are:
      • 20 or more, apply for the full-time rate
      • Less than 20, apply for the part-time rate.
Payment to Employees
  • a. Employers receiving the wage subsidy should pay to such employees, named in the application, at least 80% of their usual wages or at least the subsidy rate (i.e. full-time or part-time).
  • b. If your employee's usual wages are less than the subsidy, then usual wages to be paid to them.
Impact on Employees’ PAYE
  • a. Your employee will need to pay tax on their wage subsidy payment as it’s paid to them as part of their normal wages. This means it’s subject to the usual employer deductions, eg, PAYE, Student Loan, KiwiSaver, Child Support etc.
  • b. When calculating PAYE deductions, do not gross up the Wage Subsidy component. PAYE is deducted from the subsidy (i.e. $585.50 less PAYE, etc).
  • c. You can agree with your employee the frequency at which the subsidy is paid. However, if the subsidy is being paid outside of their usual pay cycle this might have adverse tax implications for your employees such as:
    • they may be taxed at the wrong rate
    • it may impact Working for Families entitlements.
B. Statutory Compliance Release Date: March 17, 2020
C. Effective Date: March 17, 2020
A. Update
Income-tax changes
  • a) The ACC Earner's levy has increased from $ 1,28,470 to $1,30,911 for Employees and private domestic workers (Work and Earners’ Accounts) and self-employed people (Work and Earner’s Accounts).
  • b) The maximum ACC Earner’s levy above $ 1,30,911 has been increased to $ 1,819.66.
  • c) Student loan repayment threshold has been increased to $ 20,020 from $ 19,760.
  • d) The student loan deduction threshold has increased as follows: weekly ($ 385), fortnightly ($ 770), monthly ($ 1,668.33) and 4-week period ($ 1,540).
Other Matters
  • 1. For deductions from salary as per section 157 notice, below changes have been introduced:
    • a. 10% of the amount owing as specified in the section 157 notice or
    • b. 20% of gross pay (as calculated by the employer) or higher amount as per employee.
  • 2. For payment of salary, validation file has been added for China Construction Bank.
B. Statutory Compliance Release Date: December 13, 2019
C. Effective Date: April 01, 2020
A. Update
1. New Employee Details (ED) File specifications

New Employee Details csv file, which include new fields for KiwiSaver eligibility, employee exempt income, KiwiSaver opt-out information and new KiwiSaver statuses.

The previous version of the ED csv file may still be used for reporting of employee details for now, however only the new version of the file will be accepted from April 01, 2021.

The new version of the Excel ED file to be used from the R4 will release in April 2020.

2. New EI and EIA file specifications

These files include new fields such as hours paid and prior period adjustments, and new fields for SLCIR, SLBOR and ESS deductions.

The previous versions of the files may still be used for reporting of payday information for now, however only the new versions of the files will be accepted from April 01, 2021.

3. Removal of Electronic Payment Schedule

As of the R4 release in April 2020, the Electronic Payment Schedule (EPS) file upload service will no longer be available.

PAYE intermediaries to use the Multi-payment option account (MPO) in order to process electronic payment schedules on behalf of their clients.

4. Removal of IR345

As of April 01, 2020, the Employer Deductions form (IR345) will no longer be available for filing.

5. Removal of PAYE Intermediaries Payroll Subsidy

The payroll subsidy, that some PAYE intermediaries have been able to apply for, will no longer be available from April 01, 2020.

6. Intermediaries must be linked to clients

As of April 01, 2020, all files submitted by intermediaries through the Tax Preparer tab will require a link to the client listed in the file for the file to be accepted and processed.

B. Statutory Compliance Release Date: December 13, 2019
C. Effective Date: April 01, 2020

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