A Week in Review
IR Updates PPL Content on Website
IR has recently updated its website with respect to paid parental leave (PPL) entitlements.
From 1st April 2016, entitled persons can claim PPL for up to 18 weeks, in respect of children born, or in some cases coming into their care, post that date. The payments are treated as ordinary income, as if the claimant had continued to receive their normal salary and wages or self-employed income, and as a consequence, the amounts paid are subject to tax and student loan deductions, at the entitled person’s applicable rate. A portion of the PPL payment can also be contributed to the recipients KiwiSaver account, although there is no obligation on the employer to match contributions during the period PPL is paid.
Presently, the maximum PPL is $538.55 before tax, entitlements calculated based on the average of the highest 26 of the last 52 weeks of pay for employees, or average weekly earnings for those self-employed (with a minimum entitlement of $157.50 per week before tax).
Legislation enacted late in 2017, has seen the introduction of incremental increases in the entitlement period, to 22 weeks from 1st July 2018 (where first entitlement arises post that date), and then to 26 weeks from 1st July 2020. However it is noticeable that even post the increase to 26 weeks, NZ somewhat lacks behind other OECD members, where the average PPL period is 48 weeks.
Proposed ERA amendments
While not exactly of a taxation flavour, and therefore essentially a space-filler for what otherwise could have been a very brief AWIR edition due to minimal newsworthy movements in the world of tax during the week, the Government has announced proposed changes to the Employment Relations Act, which are to be included in a Bill to be introduced into Parliament next month.
The main changes proposed are:
- Restoring statutory rest and meal breaks
- Limiting 90 day trials to employers with fewer than 20 employees
- Restoring reinstatement as the primary remedy to unfair dismissal
- Increasing protections for vulnerable workers such as cleaners and caterers, when a business is transferred or restructured
- Strengthening collective bargaining and union rights in the workplace.
Of interest to most I suspect, will be the amendment to the 90 day trial period. Having experienced the candidate who is a master of the interview process, but then sends along their identical twin, who clearly has been missing in action for a few years, to actually do the work, the “try before you buy” from an employer’s perspective has been quite useful…
Time to put on your thinking cap…
For a number of us, the January/early February period is often a somewhat quieter time (post realisation the world did not actually end on the 22nd December, and therefore what was all that pre-Xmas fuss all about), and consequently allows some reflection on the calendar year just completed, with an almost “fresh start” emotional sensation with respect to coming year.
It is also a good time to take stock of your client’s affairs, mindful that once that “there’s not enough hours in the day” feeling re-establishes itself, 1st April and the beginning of a new income year will be fast upon us.
Do you have clients wishing to elect into the LTC regime or requiring various exemption certificates for the new tax year, or have those clients who utilised the group loss offset provisions via the subvention payment mechanism in their 2017 filed positions, who need to ensure payment is made by 31 March? Now may be an opportune time to get the ball rolling….
Richard Ashby BBus, CA, CPA PARTNER
Ph: +64 9 365 5532 Fx: +64 9 309 5260 Mb: +64 21 823 464