Payroll team update
'Otherwise working day’ calculator
The MBIE – Ministry of Business Innovation & Employment (old Department of Labour) have developed a handy online calculator which can be used to help decide whether a day would ‘otherwise be a working day’ for an employee if it wasn’t a public holiday. This will have an impact on an employee’s entitlements to public holidays, sick or bereavement leave.
You can use this calculator where the employees’ working patterns are not clear or there is a lot of variation. It will take you about 15 minutes to work through all the steps.
http://www.dol.govt.nz/tools/holidaytool/owd.aspx
Paying bonuses and deducting the right amount of tax
Bonuses or lump sum payments can include annual or special bonuses, cashed-up annual leave, backpay and retiring or redundancy payments. Overtime or any regular payments are not lump sum payments.
Follow these steps to find out what tax rate to use for a lump sum payment:
Work out what your employee has earned (before tax) over the past four weeks.
EXAMPLE: You are going to pay a bonus payment of $400 to one of your employees. The employee’s gross earnings for the last four weeks were $2,500. The calculation will look like this:
Annualised income (13 x $2,500) $32,500
Add the bonus payment $ 400
TOTAL $32,900
Payroll team
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
The MBIE – Ministry of Business Innovation & Employment (old Department of Labour) have developed a handy online calculator which can be used to help decide whether a day would ‘otherwise be a working day’ for an employee if it wasn’t a public holiday. This will have an impact on an employee’s entitlements to public holidays, sick or bereavement leave.
You can use this calculator where the employees’ working patterns are not clear or there is a lot of variation. It will take you about 15 minutes to work through all the steps.
http://www.dol.govt.nz/tools/holidaytool/owd.aspx
Paying bonuses and deducting the right amount of tax
Bonuses or lump sum payments can include annual or special bonuses, cashed-up annual leave, backpay and retiring or redundancy payments. Overtime or any regular payments are not lump sum payments.
Follow these steps to find out what tax rate to use for a lump sum payment:
Work out what your employee has earned (before tax) over the past four weeks.
- Multiply this figure by 13.
- Add the lump sum payment to the figure in step 2.
- Use the income bracket / tax rate as follows
- $14,000 or less flat tax rate of 12.20%
- $14,001 to $48,000 flat tax rate of 19.20%
- $48,001 to $70,000 flat tax rate of 31.70%
- $70,000 to $116,089 flat tax rate of 34.7%
- Greater than $116,089 flat tax rate of 33%
- Tax the lump sum payment at the applicable tax rate
- Remember to calculate student loan, KiwiSaver employee deductions and KiwiSaver employer contributions on lump sum payments (where applicable to the employee).
EXAMPLE: You are going to pay a bonus payment of $400 to one of your employees. The employee’s gross earnings for the last four weeks were $2,500. The calculation will look like this:
Annualised income (13 x $2,500) $32,500
Add the bonus payment $ 400
TOTAL $32,900
Payroll team
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Accounts team update
Residential Care Subsidies – A word of warning for those with Family Trusts
We all understand that it is expensive to live in a Rest-home. At the moment aged care is largely funded by the Government, but changes to the gifting regime in 2010 have seen a crackdown on Trusts.
To qualify for the Residential Care Subsidy, the value of your assets must be below the appropriate threshold for your circumstances. Many families have the understanding that if they put their assets into a Family Trust and gift them away at $27,000 per annum then they will have virtually no assets and Work and Income New Zealand (WINZ) will pay any Resthome fees if/when the time comes.
In fact, WINZ now allows only $6,000 per year for gifts made in the last five years and $27,000 per year for a single person or couple for gifts made more than five years ago. They may also recognize any assets held by the Family Trust, with the exception of a family home, and any income from the Family Trust. Any person who gifts more than the allowed amount may be treated as having deprived himself or herself of assets for the purposes of the Residential Care Subsidy.
The changes to gifting have opened the way to what is as yet uncharted territory. There are no cut and dried solutions – it’s a matter of finding the best solution to meet your needs.
Phone the team at Accounted4 if you would like to discuss your situation.
We all understand that it is expensive to live in a Rest-home. At the moment aged care is largely funded by the Government, but changes to the gifting regime in 2010 have seen a crackdown on Trusts.
To qualify for the Residential Care Subsidy, the value of your assets must be below the appropriate threshold for your circumstances. Many families have the understanding that if they put their assets into a Family Trust and gift them away at $27,000 per annum then they will have virtually no assets and Work and Income New Zealand (WINZ) will pay any Resthome fees if/when the time comes.
In fact, WINZ now allows only $6,000 per year for gifts made in the last five years and $27,000 per year for a single person or couple for gifts made more than five years ago. They may also recognize any assets held by the Family Trust, with the exception of a family home, and any income from the Family Trust. Any person who gifts more than the allowed amount may be treated as having deprived himself or herself of assets for the purposes of the Residential Care Subsidy.
The changes to gifting have opened the way to what is as yet uncharted territory. There are no cut and dried solutions – it’s a matter of finding the best solution to meet your needs.
Phone the team at Accounted4 if you would like to discuss your situation.
Tech Treat
Drop Box
If you're confused when your friends' tech talk turns to the cloud, Dropbox could be a good introduction. Put simply, Dropbox gives you a folder in which you can put files that are stored out in the internet world (often referred to as the cloud). You can share these files with other people and if your computer or your whole system crashes, you can just retrieve your files from another computer – anywhere in the world.
The beauty of it is it's free – for up to 2 gigabytes of data – and secure. As a business, you might want more space, so you can choose a pricing plan that suits.
If you're confused when your friends' tech talk turns to the cloud, Dropbox could be a good introduction. Put simply, Dropbox gives you a folder in which you can put files that are stored out in the internet world (often referred to as the cloud). You can share these files with other people and if your computer or your whole system crashes, you can just retrieve your files from another computer – anywhere in the world.
The beauty of it is it's free – for up to 2 gigabytes of data – and secure. As a business, you might want more space, so you can choose a pricing plan that suits.
