As an employer, it’s vital to keep abreast of the changes in the minimum wage and associated rates. On top of that, you also must know the current PAYE, ACC, Kiwisaver, and Student Loan deduction rates.
If you don’t keep up to date then you could find yourself in hot water in either an employee dispute or with Inland Revenue, neither is a very pleasant experience.
Here’s a summary to assist you to keep abreast of the current rate & taxes:
Minimum Wage rate effective 1st April 2021 for all employees 16 and over (before tax) is:
$20 per hour, which is: $160 for an 8-hour day or $800 for a 40-hour workweek or $1,600 per fortnight (80 hours). All employees, per s6 Minimum wage act, must be paid at least the minimum wage for each hour worked.
The minimum rates that apply to new entrant and employees on the starting out, or training wage (certain rules apply) before tax is:
$16, per hour, which is: $128 for an 8-hour day or $640 for a 40-hour workweek or $1,280 per fortnight (80 hours). New entrants, after 6 months, go to the minimum adult wage of $20 per hour.
The Living Wage Rate is: $22.10 per hour but will increase to $22.75 on 01.09.2021 Paid Parental Leave is 26 weeks.
Kiwisaver
The minimum deduction default rate for both employees and employers is 3%.
Employees may choose to increase this to 4%, 6%, 8% or 10%.
Under 18 No employer contribution. Over 65 No employer contribution (unless they have not been a kiwi saver member for five years) Temporary & casual employees No employer contribution unless the employee opts in. There are also rules to apply regarding days employed and other criteria which must be followed with Temp/casual employees.
To be entitled to the maximum payment of government subsidy of $521.43, the member tax credit (MTC) you must contribute at least $1042.86 by 30th June each year.
ESCT (Employer Superannuation Contribution Tax)
Add up annual gross to determine the tax rate. IRD has a calculator if a part-year calculation is required.
$ 0 to $16,800 =10.5%
$16,801 to $57,600 =17.5%
$57,601 to $84,000 =30%
$84,001 to $216,000 =33%
$216,001+ upwards =39%
Student loan repayments remain at 12% of every dollar over the repayment threshold of ($20,280 per year).
Pay Period Threshold before tax
Weekly $390
Fortnightly $780
Every 4 Weeks $1,560
Monthly $1,690
Secondary Employment 12% on every dollar earned
SLCIR = Additional payments required by IRD
SLBOR = Additional voluntary payments by employees
Secondary employment Tax code
SB or SB SL $0 - $14,000
S or SL $14,001-$48,000
SH or SH SL $48,001-$70,000
ST or ST SL $70,001 - $180,000
SA or SA SL $180,000 onwards
Remember when doing terminal or one off pays to check tax code and whether Student Loan is involved
ACC Rates and thresholds from 1st April 2020-2021
ACC earner levy rate = $1.39 per $100 (1.39%)
ACC income maximum = $130,911 (previously $128,470)
Max ACC earner levy = $1,819.66 (previously $1,785.73)
PAYE on primary employment is:
10.50% on income $0-$14,000
17.50% on income $14,001-$48,000
30.00% on income from $48,001-$70,000
33.00% on income from $70,001-$180,000
39.00% on income over $180,000
17.50% = CAE
45.00% = Non-declared tax code
WHT = 15% is the standard agricultural rate but contractors can nominate their own schedular payment rate.
With Inland Revenue’s newish myIR software, they are promptly alerting employers & employees when they believe that a wrong tax code is being used by an employee. Sometimes they are not aware of the full employment situation so if you are unsure, please contact your accountant.
For further information regarding payroll please get in touch with Moira Paewai by calling our office on 06 374 7059
