New Zealand has some of the world’s top earnings and living standards. New Zealand, which is ranked 51st in the largest national economy and 67th in purchasing power parity, has a high GDP per capita, making it one of the region’s most globalized economies.
Tourism, industry, and agriculture are the main businesses, with information technology increasing rapidly. The free-market economy of New Zealand adds to the country’s high incomes and standard of living. Their Closer Economic Relations agreement, signed in 1983, connects their economies with Australia’s, enhancing cross-border ties and making it easier for enterprises to operate in the region.
Overview of payroll requirements
Every employee shall have a formal agreement on employment that outlines all facts of the relationship between employer and employee. These conventions may be collective or individual and depend on whether the employee is in the union or not, on their type of agreement. Any current collective agreement for the first 30 days of work shall encompass a non-union employee (under the 30-day rule).
The minimum wage is $18.90 per hour, increasing to $20 per hour annually by 2021. The hours of employment are restricted to 40, and the employer shall pay the overtime in the contract with the employee.
Leave criteria in payroll software NZ
- At the end of each year of continuous employment, all employees are entitled to four weeks of paid yearly vacation.
- Employees are also entitled to five paid sick days, ten days of paid family violence leave, and three days of paid bereavement leave after six months of continuous employment. After 12 months, you’ll receive an additional five paid sick days.
- In New Zealand, there are 11 public holidays, and employees are entitled to paid time off on these days if they are not working days.
- Employees may take an extended leave in the event of a work-related accident, and employers must cover 80 percent of the employee’s salary for the first week.
- Eligible female employees are entitled to 26 weeks of paid maternity leave.
Tax and other deductions in the NZ payroll system
- The fiscal year of New Zealand runs from 1 April to 31 April.
- Calculations and deductions of various kinds are made by payroll specialists, which include taxes, childcare, school loan, and the gross salary kiwi saver. Payroll specialists are responsible for payment.
- Revenue tax ranges from 10.5% for low-income work to 33% for higher-income workforces in New Zealand. The taxation of companies is 28%. From 1 April 2021, a new top tax rate of 39% will be implemented.
- New Zealand employs a Pay as You Earn (PAYE) system, which requires employers of all employee’s paychecks to deduct income tax and various social insurance benefits. PAYE can also help employees who have school loans achieve minimal duties to lessen financial hardship.
- In addition to ordinary salaries and wages, businesses may additionally have to account for different taxable or non-tax allowances to be paid to or on behalf of employees. These allowances are generally provided as a result of a collective industrial agreement or a domestic arrangement. Accommodation, food and clothing, benefits, reimbursement, and travel may include allowances.
Reporting and compliance in kiwi payroll software
- Employers must preserve wage records for at least seven years or face legal action and penalties if they do not. These documents can be stored digitally and requested on demand.
- New Zealand Inland Revenue’s program around payday filing, which attempts to reduce the number of steps and potential errors involved with pay runs, is one of the most significant improvements to the recent effect on the payroll in New Zealand. Employers must file employment information to Inland Revenue every payday starting April 1st (within two working days of electronically paying employees or ten working days by paper). If your annual PAYE/ESCT is $50,000 or more, you must file the information online. The program is similar to the Single Touch Payroll Act in Australia.
Checkbooks Payroll in New Zealand Highlights
The standard probation time for new employees is 90 days; however, companies may choose for a longer trial period if it is agreed with the employee. Trial periods are no longer authorized for firms with more than 20 employees as of May 6, 2019. (under the Employment Relations Amendment Act 2018).
Of course, these are simply the fundamentals of New Zealand payroll compliance. There are many more complexities to be aware of, just as there are with any country’s payroll.
Work with a seasoned payroll partner like DHRP to ensure you’re entirely compliant.
