2013 Tax Changes

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A common question we get after April 1 is 'why has the take home pay for my employees changed?'. This year, the following changes may affect your pays:
  • The minimum Kiwisaver contribution is rising from 2% to 3%. This will reduce the amount of pay your employees receive in the hand, and will also increase the employer contribution you make.
  • The student loan repayment rate has increased from 10% to 12%. 
  • For higher earners, the ACC threshold has been increased which will mean they pay slightly more ACC.
  • The tax codes ML and ML SL are being phased out. FlexiTime will automatically move these employees to M or M SL which may mean they pay slightly more tax.
All these changes will be made automatically in FlexiTime.

One complication is that while the student loan repayment rate increases for pays ending on or after April 1, the Kiwisaver rate changes for pays starting on or after April 1. This means that you may see two changes to take home pay amounts in subsequent pays.

There will be a small change to how the Employer Kiwisaver Contribution is shown on payslips. Instead of showing a quantity of 1 for a standard 2% employer contribution, the quantity will now reflect the percentage. This change will happen in the next few weeks. Then after April 1 this will be automatically changed to 3%.

The increase in the student loan repayment rate means employees with compulsory extra deductions may have changes to their extra deduction rates. We expect that you will receive letters from the IRD explaining any changes required to compulsory extra deductions.

If after running a pay that included 3% Kiwisaver for an employee you need to go back and run another pay for the employee from before April 1, you will need to change the Kiwisaver lines in that pay for the employee back to 2%.

Also on April 1 the minimum wage increases. FlexiTime will not automatically change your employee pay rates - this change is left to your payroll administrator. The new minimum wage is described here. You may need to pay an employee two different rates if April 1 falls in the middle of a pay period. This article describes how to do this.
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