Introducing the other changes coming in 2022
For Businesses and Employers
The information in this presentation is current as at 23 March 2022
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Introducing the 2022 annual changes
- Key changes
- Fringe Benefit Tax
Kia ora Koutou,
Greetings everyone, my name is Rata Kamau and I am an Account Manager for Inland Revenue.
Last year, the Minister of Revenue introduced the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill.
The Bill includes an assortment of proposed changes which are expected to take effect on or before the 1st of April 2022. There are also a number of other legislative changes which come into effect, or are proposed to come into effect from April too.
While most of these are minor changes, some will be of interest for businesses and employers, which we will be going over today. These include general key changes, KiwiSaver and Fringe Benefit Tax.
We also have a separate webinar for businesses and employers that gives an overview of key GST changes.
With that, let's get started.
Title: Use of money interest extension
Extend the relief of use of money interest (UOMI) to 8 April 2024.
First, If you are unable to pay your tax on time because you have been significantly adversely impacted by COVID-19, you can ask us to remit penalties and interest.
The relief of use of money interest, or UOMI, is being extended. We will be able to remit penalties and interest for tax payments that were due on or after the 14th of February 2020 up until the 8th of April 2024 (including provisional tax).
If you have already notified Inland Revenue that you are impacted by COVID-19, you won’t need to do anything.
If you become significantly adversely impacted by COVID-19, you can notify Inland Revenue through myIR or other regular communication channels.
Title: Provisional tax: Safe harbour
Requirement for customers to pay in full and on time will be removed.
UOMI will be charged for unpaid amounts after the terminal tax due date.
Existing qualification requirements and late payment penalties will still apply
Also, the requirement for customers to pay provisional tax instalments in full and on time will be removed for customers using the safe harbour option.
Use of money interest, or UOMI, will only be charged if an amount remains unpaid after the terminal tax due date.
All other existing qualifications will remain and late payment penalties will still apply.
Also, billing will still occur based on the information we hold including reminder notices and alerts in myIR.
Title: Amending employment information
You will no longer be able to amend employment information if it has been 4 years since the return was filed.
Changes can still be made for student loan and/or child support deductions.
You should also know that you will no longer be able to amend Employment information – the IR348 returns in myIR or gateway filing, if it has been 4 years since the return was filed.
You can still request changes outside the 4 years to be made for student loan and/or child support deductions using the Employment information amendments – the IR344.
Title: Rate changes
|Provisional tax early payment discount (EPD)||2%|
|Employer superannuation contribution tax (ESCT) rate for past employees||33%|
|ACC earners levy (GST included)||$1.46|
|Minimum threshold for ACC earners levy||$42,465|
|Maximum threshold for ACC earners levy||$136,544|
|Student loan repayment threshold||$21,268|
Here are some rates changes to be aware that will take effect from 1 April:
- From the 2023 tax year onwards, the provisional tax early payment discount (EPD) will reduce from 6.7% to 2%.
- The employer superannuation contribution tax (ESCT) rate on contributions for past employees will change from 39% to 33% per year.
- The ACC earners levy (GST included) will increase to $1.46. Also, the ACC Earners' levy deducted will increase to earnings up to a minimum of $42,465 and a maximum of $136,544.
- New student loan changes will apply for the period ending 31 March 2023. One key change thing for you know is that the student loan repayment threshold will increase from $20,280 to $21,268.
Title: New interest limitation rules for residential property
Claiming interest on loans for residential property as an expense will be phased out.
However, interest deductions may still be allowed if the main home is used as business premises.
Changes are coming to help address the supply and demand for residential properties, including the introduction of new interest limitation rules. The ability to claim interest on loans for residential property as an expense will be phased out over the next few years. However, interest deductions may still be allowed if the main home is used as business premises.
Title: Other changes
- New sales suppression software penalty
- Loss carry back key point
- Matariki public holiday
Here are other changes that may be of interest to you.
First, a new penalty regime will be introduced to prohibit the sale, possession, or use of sales suppression software, which alters sales data in EFTPOS systems to facilitate tax evasion. The penalty will be treated as committing a single offence in relation to all tax types and periods and a further penalty may be imposed for a later period of time if the taxpayer continues to use sales suppression software. The taxpayer is liable to pay a penalty of $5,000. For pre-notification disclosure, this penalty can be reduced by 100%. For post-notification disclosure, the penalty can be reduced by 40%.
Second, the loss carry back key point will be removed from the 2022 income tax returns because the scheme was only available for the 2020 and 2021 tax years.
Third, Matariki will be recognised as a public holiday for tax purposes. Due dates that fall on this day will be moved to the next working day.
Let’s take a look at the changes that are coming to simplify KiwiSaver for employers and employees.
Title: KiwiSaver employee contributions
New ways for employees to request contribution rate changes: myIR and their KiwiSaver scheme provider.
You will receive a list of contribution rate changes sent weekly.
Employers are not required to make a contribution rate change more than once every 3 months.
Starting 1 April, KiwiSaver members who make contributions through deductions from their salaries and wages will have more ways to request changes to their KiwiSaver contribution rate.
In addition to requesting a contribution rate through their employer, they will be able to request a change to their contribution rate through their myIR account or by contacting their Kiwisaver scheme provider.
Some key things to note are:
We will send you or your intermediaries a letter with a consolidated list of contribution rate changes that we receive from employees and scheme providers on a weekly basis.
Employees can submit as many rate changes as they like – If they submit multiple in one week, we will only send employers the latest request received for the week.
Employers are not required to make a change more than once every 3 months unless they have agreed to a shorter timeframe.
If an employee is on a savings suspension, they can only choose a new rate directly with their employers.
Employees will see their current KiwiSaver contribution rate in myIR. The rate is calculated based on the information provided from your last Employment Information (EI) return that you sent to us, for example, their total earnings and their KSE contributions.
You are welcome to inform your employees about the new ways to request changes to their KiwiSaver contribution rate.
Title: Returning employer contributions
A new process for returning employer contributions to the employer account when an employee is no longer a KiwiSaver member.
If an employee has opted out of KiwiSaver or an invalid/incorrect enrolment, any employer contributions made will be refunded or offset against any amount outstanding.
Another change that’s coming for KiwiSaver is that if an employee has opted out of KiwiSaver or an invalid/incorrect enrolment, any employer contributions made will be refunded or offset against any amount outstanding.
The amount may be offset against debt if they have money owing, as prior to the legislation change, the employer contribution would be refunded to the employer even if they had debt.
A letter will still be sent advising which employer contributions and for which employee have been returned to the employer account. These amounts will be offset against any amount outstanding or any balance remaining refunded.
Title: Fringe benefit tax
There are couple of proposed changes to be aware of when it comes to Fringe Benefit Tax. If you provide any benefits to employees, shareholders, or other people associated with your business on top of their salary or wage you may need to pay fringe benefit tax, also known as FBT.
Title: New calculation
New FBT calculation: Pooled Alternate Rate Option.
Classify benefits as attributed or non-attributed.
Rate of 49.25% or 63.93%.
It is proposed that a new FBT calculation, called the Pooled Alternate Rate Option, be introduced.
Under this option, you classify benefits as either attributed or non-attributed.
Attributed benefits are subject to a flat rate of either 49.25% or 63.93%, depending on the employee’s pay and the value of benefits attributed to them.
If you know that an employee has received less than $129,681 in net cash pay plus attributed benefits (all-inclusive pay) for the year then you may apply the 49.25%. For those over this threshold the rate of 63.93% would apply.
In the situation when attributed benefits are taxed at the 49.25% rate for some employees and at the 63.93% rate for others, two pools for of attributed benefits may be necessary.
All non-attributed benefits are subject to the flat rate of 49.25%, or 63.93% where one or more recipients is a major shareholder-employee.
Two pools for non-attributed benefits may also be necessary in this situation.
In addition to the standard all-inclusive pay determination, a ‘safe-harbour’ rule has been introduced for easier determination of when an employee qualifies for the 49.25% rate. The safe harbour will allow employers to pay FBT at the rate of 49.25% on attributed benefits for employees receiving cash pay of $160,000 or less if the benefits attributed to those employees are less than $13,400 annually per employee.
Title: Unclassified benefits
There will be clarification of the categories of unclassified benefits that employers may be liable for when providing fringe benefits.
There will also be clarification of the categories of unclassified benefits that employers may be liable for when providing fringe benefits. For example, clarification on the liability of unclassified benefits provided by associates.
Title: Thank you
To view our other webinars, visit www.ird.govt.nz/2022-changes.
If you have any questions about our webinar, please email [email protected]
This has been an overview of some of the changes likely to be of interest to businesses and employers.
We also have a separate webinar for business and employers that gives an overview of key GST changes.
If you want to find out more about the full range of upcoming changes, go to www.ird.govt.nz/2022-changes
If you have any questions about our webinars, please send them to [email protected]
Thank you for taking time out of you day to listen to this presentation.
Ka kite anō. Bye for now