More changes to payroll – yes, more! With the constant changes and complexities involved in calculating wages it often amazes me when organisations relegate the responsibility of Payroll to some poor monkey who hasn’t a hope of getting it right (no need to mention Novapay here). Thankfully the changes are pretty minor this year and here’s what you need to know:
From 1 April 2013
- School children must have tax taken off their wages. Up until now you’ve been able to pay working school children up to $2,340 per year without taking tax off it (but the IRD obviously read our article last year and decided to close that loop hole!) If you have children working for you then ask them to fill in a Tax Code declaration (IR 330). You may also need to start deducting KiwiSaver.
- KiwiSaver contributions have gone up. The minimum contribution is now 3% of the Gross salary/wages for both employers and employees. This was previously 2% and increases from the first pay on or after 1 April 2013. Employees contributing at the higher rates of 4% or 8% now have the option to drop their contribution down to 3% but you don’t have to do a thing until they complete a new KiwiSaver Deduction form (KS2).
- The tax codes for ML and ML SL cease to exist. Instead you’ll need to use M or M SL. Practically speaking this means changing any employees who’re currently using ML to M and ML SL to M SL unless they give you a new Tax code declaration form (IR330) and then you can rely on that.
- Increase student loan repayments to 12 cents (previously 10 cents).
If in doubt, do away with the payroll headaches and use a decent payroll bureau like iPayroll.
And remember, if you’re a business owner we don’t generally recommend paying yourself wages with the tax deducted like an average employee. There are smarter ways to do it – talk to us.