April 2012 Tax Changes

April 2012 Tax Changes

There are a handful of changes in the April 1 tax changes that affect payroll. We’re making all the necessary changes to FlexiTime to ensure you’re fully compliant.

ESCT

ESCT is the tax deducted from contributions an employer makes to an employee’s benefit fund, ie, KiwiSaver schemes, complying funds and other superannuation funds. Currently the 2% employer contribution is exempt.

From 1 April 2012 the 2% exemption from ESCT is going. If you’re contributing to a KiwiSaver scheme or a complying fund, all your employer contributions will be liable for ESCT.

Note that as an employer, the amount you will be paying in contributions will be unchanged. The ESCT tax is deducted from the contribution. The employee will receive less contributions to their KiwiSaver scheme.

The rate at which ESCT is deducted is held on the Employment Details tab when you edit an employee. There are different rates depending on the employee’s earnings. In the first pay of the 2012/2013 tax year, FlexiTime will look at each employee’s earnings for the previous year and estimate the ESCT rate for the coming year. Similarly, when you add a new employee the ESCT rate will be defaulted. So for the most part, you will not have any changes to make.

It is only for new casual employees (without an annual salary amount or known hours per week) where FlexiTime does not have enough information about past or future earnings that you may need to estimate the ESCT rate yourself. FlexiTime will default to the lowest ESCT rate. If your new casual employee is likely to earn more than $16,800 you will need to select the appropriate higher rate.

Student Loan Additional Deductions

From April 1 you may receive a letter from IRD directing you to make extra student loan deductions from an employee. In April there will be a new section under ‘Pay Deductions’ when editing an employee where you can record the extra payment details. These will then be automatically deducted from the employee’s pay.

Student Loan Voluntary Deductions

Employees can now request that you make extra student loan repayments over and above their standard deductions. This will be done by adding new ‘SLBOR’ pay codes. A support centre article detailing how to do this will be available by April.

ACC Decrease

The Earners’ Levy will be decreasing from 2.04% to 1.7%. This means the take home pay for employees will increase marginally for pays with a pay date after 31 March.

Robert Owen
robert.owen@flexitime.co.nz

Founder & CEO of FlexiTime.

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