There are a few tax changes coming into effect on 1 April 2013. Here’s a brief snapshot of what they are and how they’ll impact you and your business:
- Kiwisaver Contribution Rate – the minimum contribution rate is rising from 2% to 3%. This applies for both employee and employer contributions. If the contribution rate is already higher than 3% there’s no change. The upshot of this is that employees contribute a bit more (reducing their take home pay), and the cost to employers is slightly higher.
- Student Loan Changes – the repayment rate for student loans increases from 10% to 12%. The Voluntary Repayment Bonus is also being removed.
- Employing Children – previously you didn’t usually have to deduct PAYE when employing primary and secondary school children. This was because of a tax credit to which they were entitled. This tax credit has now been repealed, meaning you have to deduct PAYE from all payments.
- ME and ME SL Tax Codes – the tax credit for people earning less than $9,880 has been removed, meaning employees can no longer use the ME and MESL tax codes.
- Childcare/Housekeeper Rebate – finally, yet another tax credit which was available to payments for childcare or housekeepers has been removed. You can still claim the tax credit for donations to charities, churches and schools.
On the face of it, these changes don’t appear to be too complicated. However there are some small traps you could fall into – we recommend talking to your chartered accountant about them.