IR Updates 2014
- Details
- Last Updated: Tuesday, 12 March 2019 00:44
Changes from April 2014
A.C.C
The levy reduces to 1.45% and the maximum income threshold increases to $118,191, resulting in a maximum levy of $1713.76 p.a.
Student Loans
Calculation rate when extra pay not included with a normal pay.
Taxation
- Truncation rule changes for non M codes.
- Treatment of Regular Bonus payments.
- Payroll Giving Tax Credit Rate changed.
When an extra payment occurs separate from and without including a normal pay, (i.e. only a lump sum) student loans are calculated without the minimum earnings threshold. i.e. the whole lump sum is to have deductions made at 12%
Tax on all the flat-rate codes (S types, ND, NSW etc.) are now calculated on the whole dollars for each pay and the is tax truncated to whole cents. (Previously whole cents were subject to tax and whole dollars applied only for student loan calculations.)
M codes are unchanged and still calculated using the grossed up method, where each actual pay is multiplied up to an annual amount and tax is calculated on the whole annual dollars. The tax is then divided to weekly and truncated to whole cents. Finally the weekly amount is then multiplied back to the actual pay period.
Payroll Giving
The tax credit rate changes from 33.33% to 33.3333% of the charitable deductions up to a maximum of the tax paid less the A.C.C Levy. This will slightly increase the credit for the employee, bringing it to almost 1/3rd
Regular Bonus Payments
When a bonus is part of every pay, the total is included with that pay and not treated as a lump sum. Same as overtime and other payments.
If the bonus is monthly and covers more than one pay period, the PAYE should be re-calculated over all pays in the month, both with and without the monthly bonus amount. The difference between the two PAYE figures is the extra tax due on the bonus alone. The PAYE due for the actual pay is that on the normal pay (without bonus), plus the tax for the bonus alone. (Assumes this is the last pay in month.)
If the bonus covers more than one month, divide it proportionally back to monthly. Then calculate PAYE for a monthly bonus (as above) to determine the PAYE on just the bonus. Multiply this by the number of months the bonus covers. This is the amount to be added to the PAYE on the normal pay.
In KeyPay use the manual tax adjustment option and enter the new calculated total PAYE due.
(Our free tax calculator can be used to perform the above calculations first.)
Enter total earnings for the month {In KeyPay add MTD and CUR gross} and calculate tax as for a monthly pay. Include the bonus and repeat. The difference is the tax due on the bonus alone. Determine the PAYE for the normal pay and to this add the PAYE on the bonus to get the total PAYE for the current pay with bonus.)