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Heavy fines for lack of employment records

Employers must keep complete and accurate records of their employees to avoid severe fines. Remain compliant with the Employment Relations Act 2000 and the Holidays Act 2003 and follow the checklist given below.

As an employer you must:

  • Be able to show you have paid your employees all minimum employment entitlements like the minimum wage rate and four weeks’ annual holidays
  • Keep records with the name, age, address, and date employees started working, what their job entails, public holiday payments and tax declarations
  • Keep records for seven years even if they have left
  • Ensure all employees have complete and current employment contracts

Penalties
Employers who fail to follow these record-keeping requirements are liable for severe financial penalties. Individuals found in breach of this requirement could be fined up to $50,000, and companies up to $100,000 or three times the amount of the financial gain made. Labour inspectors can also issue an infringement notice for breach of the record-keeping requirements.

Posted on 7 December '18 by , under tax. No Comments.

Impacts of overseas travel on your KiwiSaver

KiwiSaver members who go overseas for an extended period will not receive all the benefits their accounts usually give them. Find out what you are entitled to when you go away so you can make the right financial moves.

Contributions while you are away
Your contributions will automatically stop once you cease work in New Zealand and you may need to contact your KiwiSaver provider about this. However, you can make voluntary contributions at any time while you are away. Refer to KiwiSaver information on how to do this.

Benefits you are eligible for
You will not receive a member tax credit while you’re not living in New Zealand unless you are a:

  • New Zealand government employee living overseas, or
  • New Zealander volunteering or working abroad for token payment for a specified charitable organisation.
  • You will not receive compulsory employer contributions as you are no longer employed in New Zealand.

Permanent departure from New Zealand
If you emigrate to countries other than Australia permanently, you can apply to withdraw your savings and close your KiwiSaver account after one year. Member tax credits you have received since joining will be returned to the Government, and you may keep any interest on the tax credits you have earned. You can leave your savings in a KiwiSaver account or transfer to an Australian complying superannuation scheme if you permanently emigrate to Australia.

Posted on 26 November '18 by , under super. No Comments.

KiwiSaver investors should stay calm after market drop

The Retirement Commissioner Diana Maxwell has urged KiwiSavers to remain calm after the steep decline in world share markets has affected savings.

The NZX-50 Index dropped 3.65 per cent on 11th October and had since slowly edged up by 1.17 per cent.

Maxwell urged KiwiSaver investors to remain calm and refrain from meddling with their funds. She advised that any long-term investment will fluctuate but riding out economic downturn is the best option and your balance will inevitably rise.

You should avoid switching funds, providers or suspending your super contributions as the fees or decline in the growth of your investment will not be worth it once the market’s rough patch ceases. Maxwell advised that the KiwiSaver banking apps are fantastic in tracking growth, but investors should avoid watching the apps too closely to prevent panic at small changes in the market.

However, if you are more risk averse and changes in the market provoke anxiety, consider changing your super risk profile to something more conservative.

Posted on 26 October '18 by , under super. No Comments.

New Research and Development tax incentive

The Coalition Government will introduce a new tax incentive aiming to unlock further spending on research and development. The research and development (R&D) tax incentive is the government’s response to extensive consultation with businesses.

As part of the incentive the government has stated that the rate will be higher, the threshold lower and the definition more inclusive so that as many businesses as possible can benefit from this incentive.

The R&D incentive aims to give business’ the opportunity to increase productivity and boost wages. The Coalition agreement will work to increase R&D spending to two per cent of GDP over 10 years. The government will also include refundable tax credits for start-ups and loss-making businesses in the first year of the tax incentive.

The key features of the policy include:

  • A credit rate of 15%
  • A $120 million cap on eligible expenditure
  • A minimum R&D spending threshold of $50,000 per year
  • A limited form of refund in its first year mirroring Inland Revenue’s tax-loss cash out scheme (to be replaced by a more comprehensive approach in the scheme’s second year)

Posted on 12 October '18 by , under tax. No Comments.

KiwiSaver statements to show retirement incomes and likely total savings

KiwiSaver annual statements will soon show projected balances at retirement and income figures to help consumers make a better decision about their savings.

This initiative intends to provide people with clear, easy-to-understand information about their current savings and how that tracks towards retirement. Statements will show people an estimate of the savings built-up by the time they are 65 and will include the weekly retirement income that sum would provide over 25 years.

The changes made to annual statements will take place after consultation with providers. Expectations from the government are that this amendment will be executed without substantial delay.

The collaboration also resulted in the introduction of the requirement of KiwiSaver providers to disclose to investors the total dollar fees they have charged them throughout the year.

The improvements to KiwiSaver are to allow individuals to make informed and confident decisions about their retirement savings.

Posted on 27 September '18 by , under General News. No Comments.

Everything you need to know about payday filing

From 1 April 2019 employers must comply with the new payday filing scheme. The due date for employer deductions filing and payment remains the same as the 20th of the month.

Employers must:

  • File employment information every payday instead of an Employer monthly schedule
  • Provide new and departing employees’ address information, and their date of birth- if they have provided it to you
  • File electronically (from payday compatible software or through myIR) if your annual PAYE/ESCT is $50 000 or more.

    How to payday file

Employers must Include employment information (and correct a file), employee details and employer deductions. It should be noted that paper filers can’t shift to payday filing before April 2019 unless they change to electronic filing.

The methods include:

  • In myIR through the payroll returns account through file upload (payday filing compatible software is required) or online data entry
  • Directly from your payday filing compatible software. With this option, employers will file directly from their software.

    Steps to shift to payday filing today
    There are several steps employers can undertake to start payday filing as soon as possible:

  • Review payroll processes, plan and schedule when to make the shift
  • Ask the software provider when they will have payday filing compatible software
  • If the decision is to use myIR to file the IRD must be notified when the change is made to payday filing.

Posted on 24 September '18 by , under tax. No Comments.

Divorce and your KiwiSaver

Going through a divorce is an extremely difficult experience; among the emotional challenges are the financial issues, particularly when you consider what will happen to your KiwiSaver?

The good news is the balance in your KiwiSaver prior to the relationship is safe and will not be divided between you and your partner when you divorce. However, the amount in funds contributed, and the growth incurred in your KiwiSaver during the relationship falls under the category of relationship property and as such is to be divided equally amongst a divorcing couple.

Regardless of whether the value is made from government contributions, employer contributions or individual contributions, it will still be categorised as relationship property and divided appropriately. The value of your KiwiSaver (to be divided) will usually be at the date you and your partner separate or the date of resolution.

Generally, the Court will order your KiwiSaver fund to pay out a portion of your funds to your partner’s bank account or KiwiSaver unless there is another option available. For instance, you and your partner may agree that he or she will take a larger share from the relationship’s other financial assets instead of from your KiwiSaver.

It is also important to know if full disclosure is not given during the divorce settlement in relation to your assets, your former spouse will have the option to take proceedings against you.

Posted on 29 August '18 by , under super. No Comments.

KiwiSaver for new employees: what you need to know

Upon hiring a new employee, there is a range of obligations and responsibilities you will have to meet when it comes to KiwiSaver.

Start the enrolment process
Firstly, you will be required to check whether they are eligible to join KiwiSaver. The employee needs to be enrolled in KiwiSaver (providing they are eligible for automatic enrolment) unless you offer an approved alternative superannuation scheme.

You must provide every new employee with KiwiSaver information (KS3), including a KiwiSaver deduction form (KS2) and an Opt out request (KS10) form. Ensure you keep a copy of the KS2 form for your records. If your employee does not complete the KS2 form, you can apply the default rate of 3 per cent.

Should you have an employer-chosen KiwiSaver scheme, you will be required to confirm this in writing for the new employee explaining that you have chosen a scheme they will be allocated to unless they choose their own scheme. You will need to provide them with your scheme’s investment statement as well.

First pay
Once they begin their job, you must make KiwiSaver deductions from the employee’s first pay until:
– The opt out notice takes effect.
– They no longer receive a salary or wage.
– Their contributions holiday is granted.
– The IRD notifies you to stop making deductions.
– The employee is eligible to and withdraws their savings.

New employees who have been automatically enrolled in KiwiSaver can opt out anytime on or after day 14 and on or before day 56 after starting their new position.

Employer superannuation tax (ESCT)
Generally, an employer superannuation tax (ESCT) will be deducted from the contributions you send to the employee’s KiwiSaver or super account. You must contribute at a minimum 3 per cent of their salary or wage.

Provide employee details
When they should be automatically enrolled, provide IRD with your employee’s full name, IRD number and address via a KiwiSaver employee details (KS1) form (you only need to give the information that the employee gives you).

This must be provided no later than the date for providing the IR348 or EI that corresponds to the employee’s first pay.

When they are an existing member
If your new employee is already enrolled in KiwiSaver, they must give you a:
– KiwiSaver deduction form (KS2),
– or a valid KiwiSaver contributions holiday request (KS6)

Usually, you will not have to send a KS1 for a new employee that is an existing member.

Posted on 3 August '18 by , under super. No Comments.

Introduction of Best Start

From 1 July 2018, eligible parents who have a baby born on or after 1 July 2018 will receive a Best Start payment of $60 per child.

Eligible individuals will receive $60 a week until the baby turns one regardless of household income. For those with a household income of less than $79,000, you will receive $60 a week until the child turns three.

The eligibility requirements are as follows:
– You must be the principal caregiver of the child
– You must be a New Zealand resident or citizen and have been in New Zealand for a continuous period of 12 months at any time, or
– The child you are claiming for is both a resident and present in New Zealand
– You must be a New Zealand resident
– You must have an IRD number for the child you will receive Best Start payments for.

Families can apply when registering their baby’s birth through “Register your Baby” on the SmartStart website, or by completing the Working for Families Tax Credits registration (FS1) form which can be found on the IRD website.

Posted on 5 July '18 by , under tax. No Comments.

Budget 2018: Ensuring fairness across the tax system

This year’s Budget focused on the Government’s commitment to creating a fairer tax system for all New Zealanders.

New initiatives aimed at cracking down on tax dodgers are expected to generate an extra $726.3 million in revenue. The additional revenue is set to assist the Government in addressing significant under-resourcing of critical public services.

Inland Revenue will receive $31.3 million of operating spending over the next four years, and $23.5 million to ensure outstanding company tax returns are filed. This is expected to recover approximately $183.3 million.

Initiatives designed to reduce distortion in the tax system are also set to provide additional revenue. Speculators and investors can no longer offset tax losses from residential properties against other income.

Offshore suppliers of low-value goods will be required to register for, collect and return GST. This is estimated to provide $218 million in new revenue over the next four years, and is expected to increase each year as online shopping grows.

Posted on 7 June '18 by , under tax. No Comments.