April 2021 Updates – What do you need to know?
Another end of Financial Year is looming up fast! And what a crazy year it has been.
There are quite a few different updates that are due to rollout on 1st April, so we have summarized them here for you:
Minimum Wage Increase:
From the 1st April 2021, the minimum wage hourly rates will increase to:
| Adult: | $20.00 |
| Starting out/training wage: | $16.00 |
This will effect quite a lot of businesses – if you have employee’s on minimum wage have you thought about how this might impact your cashflow and are you prepared for the change?
If you would like to discuss this or are need some help making sense of it all, please reach out to us!
Additional Tax Rates for 2021-2022 year
There will now be an additional tax rate of 39% for any income over $180,000 per annum
Student Loan Deductions – threshold increase:
In the current year the Student Loan Repayment threshold figure is $20,020.00, this will increase to $20,280.00 for the 01.04.2021 to 31.03.2022 period.
2020/2021 IRD Kilometre Rates:
Where you have an employee who maintains a logbook or other evidence that establishes the proportion of employment use for an income year, the calculation of the exempt portion of reimbursement may be based on the kilometre rate set by Inland Revenue.
The Tier One rate can be applied for the business portion of the first 14,000 kms (total) travelled by the vehicle in each income year, after which the Tier Two rates will apply.
The IRD reimbursement rates are not a rate which you are required to use, it is there as a threshold, which means that if you choose to pay a higher reimbursement rate, anything higher than the set IRD rate becomes taxable. From a payroll perspective if the rate is higher than the IRD set rate the higher portion will become part of the employee’s taxable gross.
What about the sick leave increase to 10 days?
That decision hasn’t gone through legislation yet, looking more likely towards the end of the year before we know what is happening with that.
Government accepts Holidays Act Taskforce’s recommendations
The Government has accepted the Holidays Act Taskforce’s recommendations to improve the Holidays Act by supposedly making it clearer and providing greater certainty for employers and employees.
The recommendations are meant to improve the current Act by providing a clear and transparent set of rules for providing entitlements to, and payments for, holidays and leave.
This is not what is going to happen from what we can see. In fact, there are going to be more calculations required with no more clarity that what we currently face, and all at the cost to the employer.
The Taskforce’s recommended changes are meant to address the high degree of ambiguity that has made the Holidays Act difficult to understand and implement for employers. Employees will find it easier to understand their entitlements and will also benefit from some changes to leave entitlements.
Legislation to implement the changes is expected to be introduced in early 2022 and will go through the full parliamentary process. After the legislation is enacted businesses and employers will be given plenty of time and guidance to prepare for the changes.
I await with bated breath to see what happens here.
Confused?
If you have any questions or would like to have a chat about any of these updates, do give us a call.