Payroll News

Summary of Changes From April 2010

The payroll year from 1 April 2010 as usual brings some changes to tax and ACC rates.

A new Secondary Bottom "SB" tax code has been created for secondary income under $14,000 per annum.
The method of calculating tax on extra pays and extra emoluements has changed when using Secondary "S" tax codes. The method of calculation for primary tax codes remains unchanged.
The maximum earnings liable for ACC Earner Levy increases to $110,018. (No Earner levy on earnings over $110,018) The Earner Levy rate increases from 1.7% to 2.0%.
The Student Loan threshold remains the same at $19,084. (No Student Loan repayments on earnings under $367 per week)

Payroll Giving

Payroll Giving has been introduced so that an employee can be granted an immediate tax credit for their donation(s) to a donee organisation (listed on Inland Revenue's Donee List). The tax credits for payroll donations are used to reduce the amount of PAYE paid by the employee. Payroll Giving is vouluntary for both employers and employees.

Tax credits for payroll donations are reported via an electronic Employer Monthly Schedule (the EMS in ir-file) and and an electronic payment form (the EDF in ir-file). Payroll Giving is only available to employees of employers who file their schedule and payment form electronically.

Tax credits for payroll donations are calculated using the following formula:

Total Donations x 0.3333. The same calculation applies to all tax codes and all annual income equally. (In other words the rate is 0.3333 for all donations.)

Before making a donation, individuals must have met all tax obligations and payments legally required to be deducted from their pay. These include PAYE (tax and ACC levy); Student Loan; Child support; KiwiSaver etc.

For more detailed information on Payroll Giving follow the link below to the IRD web site.

http://www.ird.govt.nz/news-updates/campaign-payroll-giving.html?id=homepage