Rena grounding

Depending on your personal circumstances, there may be some options available to help you if the grounding of the Rena has directly impacted your business or income, and your ability to make tax payments has been affected.

Check the Inland Revenue website for more information: http://www.ird.govt.nz

Effective time management

Time is money! So how can your businesses develop good time management skills and improve productivity?

• Identify the most important issues, and deal with them first.
• Sort jobs in order of importance and delgate them appropriately.
• Ensure that staff are able to deal with the jobs they are given.
• Make punctuality a company policy.
• Ensure that meetings are meaningful and impose a clear-cut agenda.
• Keep distractions, such as personal e-mail and calls, to a minimum.
• Tackle the important tasks when people are at their most productive.
• Give staff rewards and incentives to encourage their productivity.
• Prepare for unexpected issues and ensure that there will be time to deal with them.

Remember, in a faced-paced work environment, efficiency equals success!

Ultra fast broadband for Auckland businesses

Changes to IR laws

New amendments to the Employees Relations Act have been enacted and will come into affect on 1 April 2011.

More detail should be sought, however, some significant sections are as follows:

• Every employer will be required to keep a copy of every signed employment agreement from 1 July 2011.  Failure to produce a copy of the agreement can result in a fine being imposed.

• A 90-day trial period is introduced for new employees.  During these 90 days, the employer may dismiss the employees without them having a right to a grievance complaint, but only if all legislative requirements have been followed precisely.

• The Employment Relations Authority will apply a new test in determining whether the dismissal of an employee was justified.  The test is what a ‘fair and reasonable employer could have done in all the circumstances’, thus widening the factors that may be taken into account.

Extension of redundancy tax credit

Due to the Christchurch earthquake, Peter Dunne, Revenue Minister of New Zealand, has announced an extension of the redundancy tax credit until 31 March 2011.

After the disaster on the South Island, the extension is applicable to everyone receiving redundancy payments before 1 April 2011.  The rate is 6 cents in the dollar to the maximum $3 600.

Change to small business definition

On 1 January 2011, the definition of what constitutes a small business changed.  From that date, businesses must have fifteen of less employees based on a head count of employees, rather than full-time equivalent employees, to be considered a small business.  Your employee headcount should now include full time, part time and regular casual employees.

This change has the greatest impact on unfair dismissal qualifying periods.  Businesses that are no longer regarded as small businesses will not be able to rely on the small business unfair dismissal exemption.  This exemption stipulates that an employee must have been employed for at least 12 months before qualifying for unfair dismissal coverage.  Instead, employees will able to qualify for such coverage in six months.

It is important to determine whether your business qualifies as a ‘small business’.  If it does not, seek professional advice in order to come up with the best employment strategy.

Voluntary disclosure of offshore income

Australia and New Zealand’s Double Tax Agreement

New Zealand and Australia’s new double tax agreement entered into force on the 19^th of March this year.

For cross-border dividends, the provisions of the agreement will apply to amounts paid or credited from 1 May 2010. Article 10(3)(c) of the agreement provides that a competent authority determination may be made on whether a zero-rate of withholding tax will apply to certain dividend payments.

Penalties for non-payment of employer monthly schedules

The IRD has been reinforcing its position with employers not meeting their payment obligation. Non-payment penalties are issued by the IRD to employers who fail to pay their employer monthly schedule (EMS) obligations in full or on time.

A non-payment penalty is 10 % of the amount outstanding and applies when non-payment continues after the IRD issues a notification. A further 10 % penalty will be added each month the debt remains outstanding.

Employers experiencing financial difficulties are advised to contact the IRD before the due date to set up an instalment arrangement to avoid penalties. Once the amount outstanding has been paid in full, or an instalment arrangement has been set up, the last 10 % penalty will automatically be reduced to 5 %.

Employers are also reminded to file their EMS by the due date, or risk paying a late filing penalty of $250 for each schedule received late.

IRD introduces new tax rates

The Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 introduces changes to secondary tax rates and new calculations for extra pays/lump-sum payments, effective from 1 April 2010.

New RWT, secondary tax, RSCT and extra pay rates from 1 April 2010
$0 – $14,000
12.5%

$14,001 – $48,000
21%

$48,001 – $70,000
33%

$70,001 and over
38%

Current RWT deductions at the rate of 19.5 % will automatically be moved to the new 21% rate – employees with an expected income under $14,001 or over $48,000 should change their RWT rate accordingly. Incorrect RWT rates might lead to unwanted tax bills.

New secondary tax codes and thresholds from 1 April 2010
$0 – $14,000
Tax code (no student loan): SB

$14,001 – $48,000
Tax code (no student loan): S
Tax code (with student loan): S SL

$48,001 – $70,000
Tax code (no student loan): SH
Tax code (with student loan): SH SL

$70,001 and over
Tax code (no student loan): ST
Tax code (with student loan): ST SL

Employees can change their secondary tax codes by obtaining a Tax code declaration form (IR330) from their employer. If you use payroll software, these new rates should be incorporated into your payroll package for pay periods ending on or after 1 April 2010.