Grouping of Losses
Client Newsletter – August / September 2018
Payday filing is compulsory from April 2019 and all employers will have to switch to payday filing by then.
What is it?
Currently, employers file employee earnings and PAYE information with Inland Revenue every month, regardless of how frequently they pay their employees. Under payday filing, this information will be reported to Inland Revenue every time the employees are paid.
This means that employers will need to submit an employment information schedule after every payday and not every month as being done now. So, if they pay weekly salaries and wages, the employer will have to submit the earnings information weekly to the IRD.
Inland Revenue believes that if it collects payroll information more regularly, it will help offer increased certainty about employees’ tax obligations and entitlements.
How to register and file?
A New Zealand employer paying more than $50,000 PAYE and Employer Superannuation Contribution Tax (ESCT) per year will file electronically through a payroll software or myIR from 1 April 2019. Online filing can be done in three ways:
- direct from the payroll software, or
- by file upload in myIR, or
- on-screen in
A payroll software is probably the easiest because this allows the payroll information – including salary, wages, PAYE and other deductions – to be automatically sent to Inland Revenue at the same time as the employees are paid.
Also, if you file direct from a payroll software, the IRD need not be contacted to register for payday filing — just make the first submission and you will have begun payday filing. This can be done before 1 April 2019.
If either of the myIR options are used, registration is required. You will need to call Inland Revenue on 0800 377 772. IRD will register and work through the process with you.
It lS to be noted that the due dates for paying and submitting the IR345 remain the same – employers still need to submit an employer deductions form (IR345) and arrange payment.
Offshore persons applying for an IRD number
Previously offshore persons (individuals and non-individuals) applying for an IRD number needed to provide evidence of a functional NZ bank account or confirmation that an approved entity had completed Customer due diligence for the person.
The Commissioner now has discretion to issue an IRD number where a person cannot meet these requirements, as long as the CIR is satisfied about the offshore person’s identity and background.
More information about the process to follow can be found at w.ird.govt.nz (search keyword: offshore).
Lifetime Retirement Income
In a first for New Zealand, a unique type of scheme is on offer in which insurance and income are combined to provide regular income for life when someone pass the age of 60. The package has been designed by Lifetime Retirement Income (Lifetime) with one of its founders being the former Finance Minister, Michael Cullen, who was responsible for setting up KiwiSaver.
How does it work?
Many retirees have built up a nest egg or savings by the time they are in their 60’s and are often looking for a different types of investment option to suit their particular circumstances. Under this scheme, investors place all or some of their savings with Lifetime (minimum is $25,000 and maximum is $ 1m). Lifetime then provide certainty of a fortnightly fixed amount, based on the size of the investment.
Lifetime achieves this by investing the investor funds in a growth balanced fund. All investment returns are credited to the investor’ s accounts after tax, fees and fortnightly income payments have been deducted. The annual income credited to the account is a percentage of the initial investment and the rate is based on the investors age when they decide to take income payments. The rate progresses from 4.5% at age 60 to 7.5% at age 90. The table can be found at www.lifetimeincome.co.nz
For example, if $100,000 is invested at age 67, the annual rate is 5.2% and the investor will receive $5,200 each year paid at the rate of $200 fortnightly. This will continue for life.
Some or all of the investment can be withdrawn if needed at once. In the case of death, the remaining capital passes to their estate.
Please get in touch with us or your investment advisor to discuss this or any other retirement investment options.
ACC Levies
Everyone in New Zealand who is in business must pay ACC levies which cover the cost of injuries caused by accidents. While everyone who works or owns a business in New Zealand pays levies, it covers all persons in New Zealand who suffers an injury whether that injury happens at work, home, on the sports field, or out and about.
ACC levies are made up of three types of levy as follows:
Earners’ levy
Everyone who earns a salary in New Zealand pays the Earners’ levy which helps cover the cost of accidents that happen in your everyday activities outside work. It is a flat rate, currently $1.21 per $100 (excluding GST), of your liable income which has a ceiling.
Work levy
This levy goes into the Work Account to fund injuries that happen at work, and it is different for every business. Some jobs have more risks than others, so some industries pay higher levies than others.
Working Safer levy
This levy supports the activities of WorkSafe New Zealand, and is a flat rate – currently 8c per $100 of your liable payroll or income.
ACC invoices
Whether one is self-employed, a contractor, or has staff, they are likely to receive an invoice from ACC between mid-July and mid-August.
The calculation of levy is based on the Business Industry Classification (BIC) code which is collected by Inland Revenue when filing a tax return or registering for GST who then pass this on to ACC. ACC uses this BIC code to invoice levies based on the business activity chosen.
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