IR Updates 2021
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Last Updated: Sunday, 12 February 2023 12:55
Changes from April 2021
A.C.C Earners Levy
No Changes.
Student Loans
Earnings Threshold increases to $390.
The previous Compulsory and Voluntary payment codes SLCIR and SLBOR are dropped and any amounts for these are now in columns on the EI return.
KiwiSaver
More options for pay-day returns and joining eligibility and status on the ED return. The Status for a new employee is normally set to Auto Enrol or Exempt, depending on Tax code and residency. Now there are options for a new employee to immediately Opt-in, Already be a member, and provision for Temporary employees with a new code. Nothing about being on a contribution holiday though. Joining codes are: AE (Auto), AK A member, OK Opt-In, CT Casual Temp, and NK Not eligible. These states can also be applied to existing employees who can Auto Enrol or Join.
For an Opt-out, information of bank a/c, date out, and provision for a late out with reason codes are all now part of the ED return file.
Pay-Day Filing
From 1st April 2021 the new format of the EI and ED returns become mandatory.
Instead of multiple lines for compulsory and voluntary student loan codes for extra payments plus, new fields (columns) are being added to include these.
The ED return has significant changes with 13 new columns. Most due to Kiwi Saver KED return being merged into it with some different codes and the separation of Joining and Opting out, plus provision for temporary employees. Phone and Address formatting has been widened and simplified.
Tax Changes
New threshold for M code of 39% for income over $180,000.
New Secondary Tax Code SA with a flat rate of 39%. This also affects the top ESCT threshold and options for Tax on an Extra Pay.
IR Updates 2020
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Last Updated: Monday, 14 December 2020 16:37
Changes from April 2020
A.C.C Earners Levy
The maximum income threshold increases to $130,911 resulting in a maximum levy of $1,819.66 p.a. The levy rate remains at 1.39%.
The minimum liable earnings for Self Employed people due for Work and Earners levies is raised to $36,816.
Student Loans
The loan repayment threshold for employees on the M SL code increases to $385.00 per week or $20,020.00 p.a.
KiwiSaver
Changes and clarification of methods to determining employee ESCT threshhold, depending on length of employment and their employment start date. The rates themselves remain unchanged and that rate still applies for the whole tax year.
New version of the KiwiSaver Employer Guide KS4. IRD recommend employers check they have the latest version, which can be downloaded as a PDF from their website.
The Government has also announced changes to the KiwiSaver default providers. They were intended as temporary holders of funds and were to contact new members providing information for them to chose a long term provider and an appropriate risk profile. Temporary funds were invested in safe cash funds but offered only very low returns. Unfortunately, many new investors failed to complete the process and therefore remain in cash funds. The proposed changes are for providers to invest in balance funds as the default. It was estimated that this could increase final returns by 50% or more.
A rule of thumb is to initially pick the highest growth fund with a high contribution rate and to regularly review these, reducing them in proportion to ones expected lifetime remaining until retirement. The three most important factors when investing are:- Size of early contributions, Time in the fund, and the fund return rate. With compounding interest, eventually a point is reached where ones regular contributions have minimal effect on the final result and low volatility is more important.
Pay-Day Filing
From 1st April 2020 the format of the EI return is changing. It is not expected to impact employers and both formats will be accepted for 12 months.
Basically, instead of multiple lines for compulsory and voluntary student loan payments and other extra payments plus some adjustments, new fields (columns) are being added to include these. This should simplify program code in payroll a little and hopefully allow clearer error messages on submission to IRD.
Note IRD will be completely closed for a week over Easter. Details below...
Tax Changes
The name for a Special Tax Code (STC) certificate changes to Tailored Tax Code.
