Welcome to the 2014 financial year. This has come with some additional costs.
Here are the top five changes that kicked in on April 1. Make sure you provide for them in your yearly budget and update your payroll software for the changes. They will have a cost to business.
Payments to primary and secondary school children There used to be a tax credit that meant children didn't pay so much tax. But for business owners who pay their kids $45 a week for work done in the business, that payment is no longer tax-free. Children now need to pay tax and complete an IR330 (tax code declaration). The tax bill for children earning $2340 a year is $245.70.
KiwiSaver KiwSaver contributions have risen to 3 per cent for each employee, and employer contributions also increase from 2 per cent to 3 per cent. For an employee on a wage of $45,000 that's an increase of $450 for the employer per year.
Student loans The repayment rate for student loan deductions will increase from 10 cents to 12 cents for each dollar earned over the repayment threshold of $19,084. The voluntary payments bonus is also gone from April 1.
Previously, if you paid an extra, voluntary amount to the IRD a 10 per cent bonus was added to the repayment amount, reducing the debt a little bit more. Repayment increase on a $45,000 wage is now $518.32 a year.
Minimum wage The minimum wage has increased from $13.50 to $13.75 from April 1. That's an increase of 1.8 per cent. The training and new entrants wage will also increase to $11 per hour which is 80 per cent of the minimum wage.
It might also be a good time to review agreements for your employees. Check their entitlements, especially those that have provisions for additional leave because of long service. Cost is whatever is in your employment agreements. This isn't a tax change, but I wanted to draw some attention to your employment agreements as well. They can cost you a fine of up to $10,000 for individuals and $20,000 for companies if you don't have them set up properly.