The end of the financial year is always a busy time, and EOFY 11-12 is set to be the most challenging yet for New Zealand businesses. The Government is bringing in a range of small changes that will make your end-of-year calculations more difficult than they’ve been before. New tax changes mean a new set of rules and regulations, and a raft of new problems for non-compliance. If you haven’t already, it’s time to check out what these mean for your company’s EOFY preparations.
The key to surviving the end of financial year rush is knowing what these changes are, what they mean for you, and making sure you’re prepared ahead of time. This will help you navigate your end of the year returns and keep everything running smoothly, letting you get back to the all-important business of running your business!
So what are the main changes that all Kiwi business owners need to know?
There are three main differences that you should ensure you’re complying with: an update of the ACC Levy system, adjustments to Student Loans, and changes to Kiwisaver.
The good news is that changes to the ACC Levy system are relatively simple. The ACC Earner Levy is dropping from 2.04% to 1.7%. This means for every 100 dollars paid in PAYE, your employees will only need to pay $1.70 in tax instead of $2.04. Great news for your employees, who can expect a few extra dollars in their pay packets – instead of sending it to the IRD!
Another major changes affects the Kiwisaver scheme. and the way the Employer Superannuation Contribution Tax portion of the scheme works.
This one is a little more complex. In previous years, employer contributions to their employee’s Kiwisaver were tax exempt up to 2%. Since 2% is the standard compulsory employer contribution, most employees would not have seen these contributions taxed at all.
However from the 1st of April, things will change. The 2% exemption is gone, and the entire employer’s contribution will be taxed.
How does this impact you as an employer? The simple answer is that this means you have to pay more tax on your employee’s Kiwisaver accounts. It’s important to explainthis to your team, as they will see a decrease in the Net Employer Contribution figure on their pay slips.
Finally, there will also be changes to the student loan scheme. From April 1st, all employees will need to use an SL tax code, regardless of their earnings. There will also be different tax codes for compulsory student loan repayments, and those made voluntarily It’s very important to ensure that you’re applying the correct tax code to all of your employees.
The hardest part of these changes is getting your head around them, and making sure they’re set up for April 1. Don’t be afraid to chat to your accountant or financial advisor if you need assistance, or have any questions – it’s far better to be over-prepared than starting the new financial year off on the wrong foot!
Do you understand the latest round of Government tax changes? Is your business prepared? What do you find is the most challenging part of end of financial year in your business?