From 23 September 2021, the monthly retail price of Xero Starter, Standard and Premium plans is increasing in NZ. This web page tells you more. All pricing is in NZD and excludes GST.

• Starter plans increase by $1.50
• Standard plans increase by $2
• Premium plans increase by $3

And, from 16 March 2022 the monthly price of Cashbook plans is changing.

• Non-GST Cashbook plans increase by $1
• GST Cashbook plans increase by $2

There is no price change for Xero Ledger plans. This web page tells you more.

If you have a current Xero discount or promo code, it will continue to be applied to the new pricing, until the discount or code expires.

On 24 May 2021 the Holidays (Increasing Sick Leave) Amendment Bill gained royal assent and came into effect as an act. This act will apply as of 24 July 2021 and increases the amount of paid sick leave to which an employee is entitled from five days per annum to 10 days per annum.

How does this change affect current staff?

The key item to understand is that this increase is not applied unilaterally to all staff at the same time. Employees will be provided with their 10 day allocation on their first sick leave anniversary date that falls on or after 24 July 2021. Any employees reaching their sick leave anniversary date prior to this will still only receive five days. We’ve shared some example scenarios below.

Scenario 1: Employee A commenced employment on 1 April 2020. As per the requirements of the Holidays Act 2003, upon reaching six months of continuous service they were provided with five days of paid sick leave entitlement on 1 October 2020. They are due to receive their next entitlement of paid sick leave on the anniversary of this date i.e. on 1 October 2021. As this date falls after the 24 July effective date of the change, they will therefore receive 10 days of paid sick leave entitlement on 1 October 2021.

Scenario 2: Employee B commenced employment on 1 January 2020. As per the requirements of the Holidays Act 2003, upon reaching six months of continuous service they were provided with 5 days of paid sick leave entitlement on 1 July 2020. They are due to receive their next entitlement of paid sick leave on the anniversary of this date i.e. 1 July 2021. As this date falls before the 24th July effective date of the change they will therefore still receive five days of paid sick leave entitlement on 1 July 2021. The employee would not therefore receive their first provision of a 10 day entitlement until their following sick leave anniversary date on 1 July 2022

How does this change affect new staff?

Any new staff employed in the future will receive 10 days’ sick leave entitlement upon reaching their first 6 month anniversary of employment. This means any employee who has commenced with the employer on or after 24 January 2021 will receive the 10 day entitlement upon reaching their first six month anniversary.

Does this change apply to casual staff?

In order to qualify for the provision of a paid sick leave entitlement, an employee must meet one of the two following conditions:

1. They have six months’ current continuous employment with the same employer, or
2. They have worked for the employer for six months for:
   – an average of 10 hours per week, and
   – at least one hour in every week or 40 hours in every month.

If a casual employee meets the criteria above, then they will be entitled to a paid sick leave entitlement in the same way as a contracted employee. They would therefore be entitled to the new 10 day entitlement.

Please note – Sick leave is not prorated in any way. If you have a part time employee who only works 1 day per week, they will still be entitled to 10 full days of sick leave on their first anniversary on or after 24 July 2021.

Are there any other changes contained within the act?

Yes, currently employees may carry over a maximum of 15 days of paid sick leave per annum. This means when they received their new entitlement upon reaching their sick leave anniversary date (currently 5 days) they will hold a maximum of 20 days of entitlement.

As of 24 July 2021, the maximum carry-over will reduce from 15 days to 10 days. This ensures that, when they receive their new 10 days entitlement, they may still only hold a maximum of 20 days of entitlement.

With the start of the new income tax year, we thought it would be good to revisit some of the recent significant tax changes that came into force on 1 April 2021 and to highlight some important expected changes to sick leave entitlements.

New Top Tax Rate

Individual income earned above $180,000 is now taxed at 39 per cent. This threshold now matches Australia’s top tax threshold of A$180,000, but is worth noting that the Australian top tax rate is 47 per cent.

Tax payers who don’t have tax deducted at source might want to consider topping up their provisional tax payments throughout the 2021 year to avoid a larger year-end tax bill.

With this new income tax rate, other changes were required to ensure that distortions were not created across other types of personal income, these are as follows:

• Fringe benefit tax: The rate on amounts of all-inclusive pay over $129,681 will be 63.93% to ensure consistent treatment of cash and non cash remuneration.
• Employer’s superannuation contribution tax and retirement savings contribution tax: ESCT and RSCT will rise to 39% on superannuation contributions made for an employee whose ESCT rate threshold exceeds $216,000.
• Residential land withholding tax: RLWT will increase to 39% (except where the vendor is a company).
• Resident withholding tax: All the new rates will apply from 1 April 2021 with the exception of the higher RWT rate on interest, which will take effect from 1 October 2021 so that payers can make changes to their systems. The non-declaration rate of 39% will remain the same.
• There will also be a new tax code for secondary income earners whose total PAYE exceeds $180,000.
• Other personal income tax thresholds and rates remain unchanged.

Increased Disclosure Requirements for Trusts

In addition to the introduction of the new Trusts Act 2019, which came into force on 30 January 2021, Inland Revenue (IR) now require trusts to provide more information on their annual returns for the 2021-2022 income year onwards. Essentially this means that IR will pay closer attention to family trusts to see if the right amount of tax is being paid across associated tax payers.

The additional information required includes distributions and settlements made in the income year; and profit and loss statements and balance sheets. The Commissioner can also request information from trusts for prior years back to the 2013-2014 tax year as appropriate. This allows for comparable information to be gathered.

The increased disclosure requirements do not apply to non-active trusts, charitable trusts and trusts eligible to be Māori authorities.

Minimum wage has increased

The adult minimum wage has increased by $1.10 to $20 per hour. The starting-out and training minimum wage has risen to $16 per hour so it remains at 80 per cent of the adult minimum wage.

Income abatement Threshold for benefit payments has increased

Prior to 1 April there was a tiered abatement threshold ranging from $90 to $115 before tax each week, dependent upon individual/ family circumstances The threshold is now $160 before tax each week for the following benefit categories, Jobseeker support, Sole parent support, Supported Living payment, Veteran’s pension under 65 and NZ Super/Veteran’s pension with a non-qualifying partner.
Youth Payment and Young Parent Payment are not affected as they have different income abatement rules.

Family tax credit

The family tax credit has increased to a minimum of $566 per week for families who work full-time and do not otherwise receive a benefit (this is to ensure they are on a higher income than if they received a benefit)

IRD is checking residential land transactions that occur within the bright-line period. A few important points to remember around bright-line dates.

• A company owning residential property becoming an LTC or exiting the LTC regime is considered to be a bright-line disposal and repurchase. This could mean a bright-line profit arising and definitely a new start date.

• Changing shares in an LTC that owns residential property will be a partial transfer for bright-line purposes so the same issues above will apply. The $50,000 de minimis would apply if the deemed bright-line profit along with any other deemed income for the shareholder exiting or reducing their holding is less than $50,000.
• The subdivision of land does not restart the bright-line acquisition date for the new title. It is still the original acquisition date for the land.
• Changing the use of the land from private to arms-length rental does not restart the bright-line acquisition date.
• There are special rollover relief provisions for the transfer of residential property via a relationship property agreement and for transfer from a deceased to their estate, to the estate to the beneficiary and for a transfer by the beneficiary.

There are no concessions for property sold within the bright-line period unless one of the specific exclusions apply no matter what the client’s circumstances are.

From 1 July 2021 new rules require both parties to the sale and purchase of 2 or more assets with different tax treatments to allocate the same amounts for each asset. These amounts will normally be in line with the market value. If there is no agreement on amounts allocated and certain thresholds are exceeded, the seller will have 3 months from the date of settlement to determine an allocation and notify this to both the buyer and Inland Revenue. If after 3 months the seller has not made a notification, then the buyer has 3 months to notify the seller and Inland Revenue. Notifications to Inland Revenue can be made through myIR and should include the phrase “Purchase price allocation” in the subject line. The notification should include both parties’ names, IR number, date of agreement and settlement, transaction value and price allocation at the level of asset classes that are subject to particular income or deduction rules. When neither party determines and notifies an allocation, then the Commissioner may determine the allocation.

Following the SMS debt pilot in December last year and consultation with tax agent professional bodies and IR’s Tax Agent Cohort, from 1 June 2021, IRD will begin contacting clients of tax agents (Jacal) directly about outstanding arrears if:

• the debt is more than 60 days overdue, and
• the amount of the debt is between $200-$10,000, and
• the debt is assessed (ie not missed provisional tax instalments), and
• the client account is active, and
• there is no active tax pooling indicator on the client’s account.

IRD will contact customers by phone or SMS message. Any letters issued will continue to follow standard client mail redirect rules. This allows agents (Jacal), who deal with client debt, 60 days from the due date to organise a payment plan (via instalments or in full) with their client directly. However, if the debt is not under positive arrangement after 60 days, IRD will start recovery action directly with the client.

It’s important that IRD continue to take action on these debts to uphold their responsibility to the NZ Government and help support COVID-19 initiatives.

Johnston Associates has decided to provide more regular information via social media channels – namely Facebook and LinkedIn. We will continue to publish our quarterly newsletter, but you will find more regular and timely information through these channels.

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