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Employer superannuation contribution tax (ESCT) and fringe benefit tax (FBT) thresholds have changed. FBT calculation methods have also changed.  From 1 April 2025, employer superannuation contribution tax (ESCT) and fringe benefit tax (FBT) thresholds will change.  FBT calculation methods will also change.

What you need to do

If you haven’t yet, check that you have the most up-to-date version of your payroll software (if you use software).  Your payroll software should have updates for these changes.

If you calculate ESCT yourself, the PAYE deduction tables (IR340 and IR341) have been updated and are available now.

ESCT threshold changes

An example of ESCT is an employer’s contribution to an employee’s KiwiSaver scheme.  ESCT is the tax that is deducted from this contribution.

The new ESCT thresholds take effect from 1 April 2025.

Employer superannuation contribution tax

FBT changes

You need to apply a new alternate tax rate calculation method for the first time.  The new rate applies from 1 January 2025 and is for final quarter returns.

The new FBT thresholds take effect from 1 April 2025.

Fringe Benefit Tax Rates:  Fringe benefit tax rates

Source:  IRD  https://www.ird.govt.nz/income-tax-changes

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

From 1 April 2025:

• the adult minimum wage will go up from $23.15 to $23.50 per hour
• the starting-out and training minimum wage will go up from $18.52 to $18.80 per hour
• all rates are before tax and any lawful deductions, for example, PAYE tax, student loan repayment, child support.

What to do now

Take this opportunity to review your business processes, employment records and systems.

• Check that your payroll system is ready and updated for the 1 April changes, whether you have a manual or computer-based system.
• Re-calculate and update your budgets and cashflow as the increase may have an impact, including on items such as ACC levies, KiwiSaver contributions and holiday pay.
• Review the pay rates for skilled employees from 1 April.
• Consider reviewing your pricing strategy.

Tools to help you

The free cash flow forecast tool can help you plan for the minimum wage change.

Cash Flow Forecaster(external link)  The free employment agreement builder can help you make sure future agreements have the correct minimum wage details.

Employment Agreement Builder(external link) Employment New Zealand also has tips on how to prepare for 1 April on its website.

Minimum wage is increasing on 1 April 2025. Are you ready?(external link) — Employment New Zealand

Source:  Business.govt.nz info@ub.comms.business.govt.nz

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

In 2023 the External Reporting Board (XRB) published updated accounting standards for Tier 3 and 4 registered charities.  If your charity’s financial year began on or after 1 April 2024, the Tier 3 (NFP) and Tier 4 (NFP) Standards are now in effect and you should be using or preparing to use these.

What do you need to do?

Know what Tier you are – There is specific information for Tier 3 and Tier 4 charities. You can check which tier your charity is here.

Know what has Changed – The Statement of Service Performance, which is the non-financial portion of the Performance Report, has been simplified. Instead of reporting ‘outcomes’ and ‘outputs’, charities are now required to describe their main activities undertaken during the financial year and provide a numerical measurement as far as possible.  Tier 3 charities are also required to describe what objectives the entity is seeking to achieve over the medium to long term (i.e. in the next 3 to 10 years).

The required categories of revenue and expenses in the financial statement portion of the Performance Report have also changed. The wording has been simplified and some categories have been split into more detailed groupings for additional clarity.  For example, funding from grants is now separated into more specific groupings, and the revenue category of ‘Donations, fundraising and other similar revenue/receipts’ has been renamed and no longer includes grant revenue.

The previous expense category of ‘Volunteer and employee related payments’ has now been split into two new categories separating employee costs from volunteer related costs. Understanding the changes now will ensure you are organised at the end of your financial year in advance of the Annual Return and Performance Report filing date.

Be Ready to Report – To find out when your charity needs to use the updated standards see either Tier 3 or Tier 4 whichever is applicable to your charity. You have 6 months to file after your financial year (balance date) ends. If you are unsure of your charity’s balance date, you can find this by logging in to your charity’s online account.

Find more Information –

External Reporting Board |Tier 4
External Reporting Board | Tier 3 and What’s changed in the new Tier 3 Standard

Source Information: Charities Services Newsletter – February 2025

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Updated PBE Tier Sizes – Reporting relief to benefit smaller charities and NFP

The XRB has amended XRB A1 Application of the Accounting Standards Framework to increase the Public Benefit Entities (public sector and not-for-profit entities) size thresholds for Tiers 1, 2 and 3 as follows:

• Tier 1/2: $33 million total expenses (from $30 million)
• Tier 3: $5 million total expenses (from $2 million)

The effective date of accounting periods that end on or after 28 March 2024 means that entities with a balance date of 31 March 2024 can apply the new tier sizes immediately. As a result, some entities may be eligible to move from Tier 2 to Tier 3 and therefore able to benefit from a notable reduction in reporting requirements.

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Source: XRB (External Reporting Board) Updated PBE Tier Sizes » XRB

Certain commercial vehicles, “work-related vehicles” as defined in IRD Fringe Benefit tax guide IR409-2022 can be taken home by employees and the related travel not be considered a fringe benefit.  You must give employees a letter explaining the restrictions.  It is not sufficient just to include an appropriate clause in the employment contract. 

Travel to and from work is exempt from FBT and travel which is incidental to business travel.  Inland Revenue gives the example of passing a bank on the way home from work.

There is also a requirement for the employer to check at least once a quarter to ensure compliance.

Cars (ie not “work-related vehicles”) are treated differently.  There is no right for an employee to take the vehicle home and still be exempt from Fringe Benefit Tax, apart from emergency calls, as defined in IR409-2022.

In some cases, the business actually operates from home and therefore both cars and commercial vehicles travelling from their home to clients/customers could still be considered to be at work travel.  Fringe Benefit Tax would not apply.

However, if an employee, who just works at home as a matter of convenience and from time to time uses the company car to get from home to an actual place of work, for example a general medical practitioner travelling to the health centre each day, use of their company car would be a fringe benefit.

SOLE TRADERS AND PARTNERS IN A PARTNERSHIP

Sole traders and partners in a partnership do not pay FBT on business vehicles they use.  You instead make income tax and GST adjustments for private use of the vehicle.

DOUBLE CAB UTES

There could be an issue with twin cab vehicles not being considered work-related.  These vehicles seat 4 people and have a shorter cargo bed than a regular work-related vehicle.  However this does not mean they are automatically exempt from FBT. These vehicles still need to meet the conditions below:

• Employees must be provided with a letter of restriction stating that the work related vehicle is not available for private use except for travel between home and work, and for travel related to the business.
• Checks need to be done quarterly (every 3 months) to make sure employees are only using the vehicles for work-related purposes.

BUSINESS TRAVEL EXEMPTION

If an employee regularly travels with a vehicle, FBT may not apply when:

• they stay away from home overnight with the vehicle
• they are away for more than 24 hours
• they need the vehicle to perform their work.

Sources:

Tax-e-mail Issue 2404

IR409-2022 https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir400—ir499/ir409/ir409-2023.pdf?modified=20240514224901&modified=20240514224901

IRD https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax/types-of-fringe-benefits/employer-provided-motor-vehicles-for-private-use

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content.  All related links provided to the corresponding websites are subject to change as they are live links.

To make it easy for you to set up as a sole trader. Here is a checklist to guide you: https://www.business.govt.nz/getting-started/sole-trader-guide/sole-trader-checklist/

There are four areas that are important to understand when you’re a sole trader. 

• Getting started as a sole trader – registering for myIR, myACC and other information.
• Financial – essential tasks – filing your tax return and other essential tasks.
• Business paperwork – filing the right information in the right way.
• Hiring staff – what to do if you want to bring on staff.

When you’re deep in the day-to-day of running your business, it can be hard to keep track of the bigger picture. Or maybe these tasks are simply not your cup of tea. Seeking advice from different sources can give you a fresh perspective on your business. Consider getting help from:

• a traditional accountant
• a digital accountant
• business mentors
• investment advisors

Seeking advice from an accountant or bookkeeper can free up time for you to focus on what you do best – your job.

Source: www.business.govt.nz

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Set Up a Payment Plan to tackle GST Debt

Paying tax in one lump sum isn’t always easy. Instead you can set up an instalment arrangement to spread your bill over smaller weekly or fortnightly repayments. There is no fee to set this up, and you won’t be charged penalties and interest. You can set up an instalment arrangement in myIR under the Payment section.

Simply head to myIR, click on ‘I want to…’ then ‘Payments’.

Before you start, you’ll need to know:

• how much you can afford to pay towards reducing your debt
• whether you’ll be paying by direct debit or another payment method
• when you want your instalment payments to start.

Source: MBIE & IRD:  Set up a payment plan

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Square Metre rate for Home Office Calculations 2023

The square metre rate for home office calculations has been set at $51.05 for the 2023 income year (1 April 2022 to 31 March 2023).

Home Office Expenses

If you’re a business owner and use part of your family home for work, you can make a claim for this as a business expense. In order to claim the expenses, there must be a connection between the use of your home and the business income being generated.

You can claim a portion of your household expenses, such as rates, insurance, power and mortgage interest. The portion you can claim relates to the area of your home that you use for business.

Companies Claiming Expenses for the Use of your Home

If your business is a company and does not pay anything towards the home office expenses, it cannot claim an expense.

However, if your company reimburses you for the use of your home, then it may be able to claim an expense. The company needs to be able to prove that there is a link between the money paid for the use of your home and the income the company makes. It also needs to keep accurate records that show how and when it paid for the use of your home, the amounts paid, and how it arrived at the amount to pay.

If you are a shareholder-employee/employee and the amount paid is a fair reimbursement for the use of your home, then it is exempt income and you do not need to pay income tax on the amount.

Splitting your Household Expenses

If part of your home is completely set aside for business use you just need to consider the floor area. If it is not completely set aside, you also need to consider the amount of time that part of your home is used for income-earning activities.

If you are registered for GST, the business expenses you claim will not include GST, when this applies. If you are not registered for GST, these expenses will include GST.

If you have a mortgage you can claim the same proportion of your mortgage interest (but not the principal) paid during the year. There is no GST involved in this.

For GST, you can claim a portion or percentage of the GST on the expenses.

Like you do for any other business expenses you are claiming, you need to keep invoices and other records for these expenses.

IRD Link: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-expenses/using-your-home-for-your-business

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.