On 1st April the minimum wage increases and a new top income tax rate takes effect. Here is a snapshot of the changes and a quick checklist for you to tick off before April rolls around. It’s nothing complicated, but it needs to be done this month.
THE CHANGES…
1. Minimum wage increase:
- Adult minimum wage will go up, from $18.90 to $20.00 per hour.
- Starting-out & training minimum wage will go up from $15.12 to $16.00 per hour.
2. New higher earnings tax bracket:
- A new top personal income tax rate of 39% will apply for employees earning over $180,000 per annum.
3. Minor tweaks to PAYE, student loans & ACC taxes
- Every year there are small tweaks to payroll taxes. For most employees there is no impact however it pays to check.
THE CHECKLIST…
1. Review all your current wage rates and salaries.
- If you have waged employees under $20.00 at the moment, you will need to increase to $20.00 on 1st April. 16 to 17 year olds (with less than six months’ service) will need to be paid at least $16.00 per hour as do any employees in a registered training scheme.
- If you have a salaried employee at around $42,000 (per annum) you should review their salary as you’re potentially in the danger zone of paying under the minimum wage. So it’s important to be aware of any extra hours they may be working and ensuring they are paid at least the minimum wage.
For example, for someone being paid $42,000 and working a 40-hour week, you only have a quarter of an hour’s wiggle room across the week. - If you have an employee earning over $180,000 per annum, including any extra pay such as bonuses, the tax rate increases to 39%. Now’s a great time to let your employee know that their take-home pay will reduce. If you are paying employees in this category by automatic payment (AP), you will need to change your AP.
2. Ensure you update your payroll system.
3. Advise your staff of any changes.
4. If you are paying employees by automatic payment (AP), you may need to change your APs.
If you’re thinking about outsourcing your payroll, give us a call – we’d love to help you. And if you have any questions, simply drop us a line or give us a call.
