Business Tax Update - 2009
Business Tax Update Issue 4 December 2009
- Reminders
- KiwiSaver - rules on temporary employees
- Holiday pay and child support deductions
- Our services over the holiday season
- 10% voluntary repayment scheme for student loan borrowers
- Legislation changes in horticulture and viticulture industries
- Change to FBT returns
- Remember to use the correct FBT rate
Welcome to Business Tax Update
If you have any suggestions for topics you'd like covered in this newsletter, email BusinessTax.Update@ird.govt.nz
Season's greetings to you all. We wish you a safe, relaxing holiday.
Reminders
GST returns and payments
Here are some things that help us process your GST returns and internet banking payments faster.
GST returns:
- Use only blue or black pen (not red or green pens, highlighters or pencils).
- Complete the cents column. Don't use a dash or leave the column blank.
- If your amount is whole dollars only, ie no cents, use 00 after the decimal point in the cents column.
- Don't enter negative (-) figures.
- Use boxes 9 and 13 for adjustments. Box 9 is sales and income adjustments and box 13 is purchase or expenses adjustments. Find out more about calculating your GST adjustment.
GST payment codes:
For GST payments use:
- GST for GST-only payment
- GAP for combined GST and provisional tax payments.
Find out more about the types of tax codes.
KiwiSaver - rules on temporary employees
Over the holiday season you may employ some temporary employees. If you employ a casual employee for less than 28 days you don't need to enrol them in KiwiSaver. Here's a quick refresh about who's eligible for KiwiSaver and the enrolment process.
You must automatically enrol eligible new employees, who aren't already members. They must be at least 18 and under 65 years old.
Within seven days of the employee starting, check whether they're eligible to join KiwiSaver and give them a KiwiSaver employee information pack (KS3). The pack includes a KiwiSaver deduction form (KS2) which they can use to let you know if they want to contribute 2%, 4% or 8% of their pay.
If you have an employer-chosen KiwiSaver scheme you must advise new employees in writing that you've chosen a scheme and they'll be allocated to it unless they choose their own KiwiSaver scheme. You must also give them your scheme's investment statement.
You'll need to send us the full names, IRD numbers and addresses of any new employees you're automatically enrolling, using the KiwiSaver employee details (KS1) form. You can send us the KS 1 form electronically if you're registered for ir-File. If you'd like to view a demonstration or register for ir-File go to "Secure online services". Please fill in a KS 1 form every time an eligible employee is enrolled in KiwiSaver, even if they want to opt out.
Employees exempt from automatic enrolment
You don't have to automatically enrol an employee, for example, if they:
- are under 18 years old (they can join voluntarily)
- are over the age to qualify for New Zealand Superannuation, currently 65 years
- are a casual agricultural worker, election day worker or private domestic worker who pays their own PAYE
- are employed on a temporary employment contract of 28 days or less
- are casual employees engaged on an irregular and intermittent basis and who receive holiday pay with their wages
- are on paid parental leave or ACC
- stay on the same payroll:
- when a business is taken over or amalgamated, or
- if they relocate with the same employer
- only receive schedular payments
- are not a New Zealand resident
- don't normally live in New Zealand (unless they're a government employee working overseas)
- are not required to have PAYE made from their salary or wages
- revert to an employer they were seconded from, straight after that secondment.
Find out more about KiwiSaver or call us on 0800 377 772.
Holiday pay and child support deductions
If you make child support deductions for an employee, you need to deduct it at the usual rate from their holiday pay.
If your employee requests their holiday pay before going on leave you still need to deduct child support. When you complete the child support box of your Employer monthly schedule IR348 (EMS) use the child support code 'A' to show a deduction made in advance.
If the child support deducted is less than expected use the child support code 'D' to show a shortfall. See the example below for more information.
For questions about child support and holiday pay please call us on 0800 220 222. If any of your employees have questions about child support they can call us on 0800 221 221.
For more information about the rules for holiday pay and how to calculate it, visit the Department of Labour's website or call them on 0800 20 90 20.
Example
Paul normally has child support deductions from his pay at $50 a fortnight. In December, Paul is taking three weeks annual leave. In the last week of November he will be paid three weeks holiday pay in advance, along with his normal fortnightly wages.
| Normal fortnightly child support deduction | $50 |
| Divide by two to get a weekly amount | $25 |
| Multiply by the number of weeks of holiday pay being paid (in this example 3 weeks) | $75 |
|
Total child support deducted ($50 for the normal pay, plus $75 for the three weeks' holiday pay) |
$125 |
November EMS: The child support deductions will be more than the amount expected. Use the child support code 'A' to show a deduction made in advance for Paul.
December EMS: The child support deductions will be less than the amount expected. Use the child support code 'D' to show the shortfall was deducted in the previous month, ie, November.
Our services over the holiday season
Over the holiday season our contact centre will be operating as follows.
| Contact centre opening hours | |
|---|---|
| Saturday 19 December 2009 | 9am to 1pm |
| Monday 21 December 2009 | 8am to 8pm |
| Tuesday 22 December 2009 | 8am to 8pm |
| Wednesday 23 December 2009 | 8am to 8pm |
| Thursday 24 December 2009 | 8am to 5pm |
| Friday 25 December 2009 | Closed |
| Saturday 26 December 2009 | Closed |
| Monday 28 December 2009 | Closed |
| Tuesday 29 December 2009 | Closed |
| Wednesday 30 December 2009 | Closed |
| Thursday 31 December 2009 | Closed |
| Friday 1 January 2010 | Closed |
| Saturday 2 January 2010 | Closed |
| Monday 4 January 2010 | Closed |
| Tuesday 5 January 2010 | 8am to 8pm |
Our normal hours 8am to 8pm weekdays and 9am to 1pm Saturdays will resume on Tuesday 5 January 2010.
KiwiSaver contact centre
Our KiwiSaver contact centre hours changed on 2 November 2009. The new hours are Monday to Friday 8am to 6.30pm and it's now closed on both Saturday and Sunday. The KiwiSaver contact centre will be closed between 5pm Thursday 24 December 2009 and 8am Tuesday 5 January 2010.
| KiwiSaver contact centre 0800 numbers |
|---|
| 0800 549 472 |
| 0800 377 772 option 1 KiwiSaver employers |
| 0800 549 470 option 2 Scheme providers |
Child Support contact centre
Our Child Support contact centre will be closed between 5pm Thursday 24 December 2009 and 8am Tuesday 5 January 2010.
| Child Support contact centre opening hours | |
|---|---|
| 0800 221 221 (child support general) | Monday to Friday 8am to 6pm. Closed Saturday, Sunday and public holidays. |
| 0800 220 222 (employers) | Monday to Friday 8am to 5pm. Closed Saturday, Sunday and public holidays. |
Large Enterprises
Large Enterprises, which is for businesses with over $100 million turnover, will be closed between 2pm Thursday 24 December 2009 and 8am Tuesday 5 January 2010.
| Large Enterprises 0800 opening hours | |
|---|---|
| 0800 443 773 | Monday to Friday 8am to 4.30pm. Closed Saturday, Sunday and public holidays. |
Other services
Online services, ir-File, and our 0800 self-service will be unavailable from Friday 25 December 2009 to Tuesday 29 December 2009.
10% voluntary repayment scheme for student loan borrowers
The government has introduced a 10% student loan repayment bonus for voluntary repayments made from 1 April 2009 that total $500 or more in a tax year. For example, if a borrower made voluntary repayments of $800 over a tax year, they would receive a bonus of $80 and their loan balance would be reduced by $880.
Borrowers can make small voluntary repayments throughout the tax year and qualify as long as they total $500 or more than their repayment obligation. For example, they could pay $10 a week extra and still be eligible.
The legislation comes into force on 1 April 2010. The bonus will be applied retrospectively to eligible borrowers' loans, taking into account all voluntary repayments made from 1 April 2009.
Eligibility
To be eligible for the bonus, borrowers must:
- be up-to-date with their repayment obligations, this includes making repayments by the due date, using the correct tax code and filing income tax returns (if required)
- make voluntary repayments for the tax year totalling $500 or more
- have a loan balance with Inland Revenue of $550 or more at the beginning of the tax year (1 April).
What this means for you
Student loan borrowers can make voluntary repayments on top of their compulsory repayments through a range of methods including PAYE. Some of your employees with student loans may ask you to increase the student loan deductions from their pay. They'll need to apply for a special repayment rate by completing a Special tax code/student loan special repayment rate application (IR23BS) and send it to us.
As when making any financial decisions, borrowers are advised to seek appropriate financial advice before participating in the voluntary repayment scheme.
Find out more about the voluntary repayment bonus.
Legislation changes in horticulture and viticulture industries
From 1 April 2010 payments made to any type of contractor (individual, partnership, trust or company) in the agriculture, horticulture or viticulture industries are subject to tax being deducted from schedular payments if:
- the work or service provided under a contract or arrangement is for the supply of labour, or substantially for the supply of labour, and
- the work or service is being provided in connection with land that is intended to be used for the cultivation of fruit crops, vegetables, orchards or vineyards.
The requirement to have tax deducted from the schedular payments does not apply to work or services by a:
- post-harvest facility
- management entity under a formal management agreement under which the entity is responsible for payment for the work or services provided.
Keep an eye on our website for more information about this.
Change to FBT returns
Over the past couple of months we've made some changes to our forms and publications to keep our information current for you. We also need to make sure we're meeting New Zealand Post standards.
From this month the Fringe benefit tax quarterly return (IR420) will be printed in black and white with a purple strip on either side to help you identify your FBT return. The text on your returns will be clearer and line up with the headings to make them easier for you to read.
The returns won't have a carbon copy so you'll need to keep a copy for your records.
If you're not doing so already, you can file your FBT return online, go to “Get it done online”. Remember to print a copy of the form for your records.
Remember to use the correct FBT rate
If you file your FBT returns quarterly the single rate option reduced on 1 April 2009 from 64% to 61%.
Footnote
Business Tax Update comments generally on topical tax issues relevant to businesses. Every attempt is made to ensure the law is correctly interpreted, but articles are intended as a brief overview only. The examples provided are not intended to cover every possible factual situation.
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Date published: 08 Dec 2009
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