top of page

June Newsletter

It's time to provide us with your 2024 accounting information so we can complete your accounts. To make this process simple and easy we have created an online checklist for you to fill out.

 

Our June Newsletter includes tax updates announced in the 2024 Budget on May 30th, as well as important upcoming dates to be aware of.


2024 Annual Accounts

Provide us with your information.


We are ready to begin working on your accounts for the year ending 31 March 2024.To proceed, we need you to complete our end-of-year checklist and supply any accounting details that we do not already have access to.

 

Please use the following link to complete our annual online checklist and upload any relevant documentation.


2024 Government Budget

On 30th May 2024, the New Zealand government announced the budget for the upcoming year, bringing several changes that will impact businesses and individuals. Here’s a summary of the most important updates:

 

To read the full report you can view it on the ministry's website here.


Tax Bracket Changes

The government has adjusted the personal income tax thresholds, effective from 31 July 2024. These changes aim to provide tax relief, but requires employers and payroll providers to update their systems.

 

New Tax Thresholds:

The 2024/25 tax year will be a "composite" year, meaning that tax obligations will be averaged across the year. This may result in some employees having a tax liability or credit based on their income distribution throughout the year.

 

Employers should ensure their payroll systems are updated by 31 July 2024. Any errors can be corrected in subsequent pay periods.

 

Factoring in the threshold adjustments and application dates, for the 2024/25 tax year, there will be eight tax bands that need to be applied to calculate the total tax obligation, here is a preview of how this will look for the tax year:

Tax Rate Threshold Changes and Consequential Implications

 

The adjustment of tax thresholds for the 2024/25 tax year introduces significant implications for taxpayers. Notably, if an individual earns disproportionately more income in the last 244 days of the tax year, they may face underpayment of taxes or a tax liability, depending on the timing of income accrual.

 

Consequential Changes:

 

The modification of tax thresholds not only affects payroll processes and personal tax calculations but also triggers repercussions for other tax types. Here's a breakdown of these changes:

 

Extra Pays and Tax Codes:

  • Thresholds determining extra pay rates and tax code application remain unchanged for the 2024/25 tax year, with adjustments scheduled for 1 April 2025.  

Fringe Benefit Tax (FBT):

  • FBT thresholds remain static until 1 April 2025, but calculation methods will be revised from 1 April 2024 to prevent tax reductions from being reclaimed through FBT formulas.  

Employer Superannuation Contribution Tax (ESCT):

  • ESCT thresholds will only change from 1 April 2025, potentially resulting in higher ESCT for some workers but reducing compliance costs for employers.  

Retirement Superannuation Contribution Tax (RSCT):

  • Employers opting for RSCT will need to apply new thresholds from 1 April 2025, aligning with personal tax thresholds.  

Prescribed Investor Rates (PIR):

  • PIR adjustments will take effect from 1 April 2025, with thresholds aligning with new personal tax thresholds.  

Resident Withholding Tax (RWT):

  • Taxpayers transitioning to lower tax thresholds can opt for a lower RWT rate by informing their interest payer.  

Independent Earner Tax Credit (IETC):

  • Eligibility for IETC expands from 31 July, benefiting individuals earning up to $70,000 annually. Apportionment calculations ensure accurate credit allocation.  

Additional Tax-Related Changes:

  • FamilyBoost: Administered by Inland Revenue, FamilyBoost allows parents to reclaim up to 25% of weekly early childcare costs, capped at $75 per week, starting from 1 July 2024. Eligibility criteria apply, with Inland Revenue assessing household income in real-time.  


You can read about all tax changes on the IRD Website.



Mileage Reimbursement Rates

The Commissioner of Inland Revenue has set new mileage reimbursement rates for the 2024 income year, reflecting increased vehicle running costs.

 

New Rates for 2024:


Tier One Rate: Applies for the first 3,500km of business travel or the business portion of the first 14,000km of total travel.

 

Tier Two Rate: Applies after these limits are exceeded and reflects only variable costs.

Employers need to update their reimbursement policies to reflect these new rates. If rates are not updated immediately, it will not cause a PAYE issue, but employees may expect higher reimbursements.


Square Metre Rate for Dual Use of Premises

The square metre rate for the dual use of premises for the 2024 income year has been set at $53.10.

This rate helps taxpayers calculate deductions for using their residential premises for both private and business purposes without needing to keep detailed records of actual costs.


 

These changes require timely updates to payroll and reimbursement systems to ensure compliance and to maximise benefits for employees.

 

Employers should:

 

  1. Review and update payroll systems by 31 July 2024.

  2. Adjust mileage reimbursement rates as per the new guidelines.

  3. Apply the new square metre rate for dual-use premises deductions.  


For further details or assistance, please get in contact.

 

Important Dates This Month

28th June

  • Public Holiday - Matariki

  • GST return due for the period ending 31 May 2024.

  • Provisional tax deadline for businesses using the AIM method and filing GST returns bi-monthly or every six months.

  • Provisional tax deadline for businesses using the ratio method. 


1st July

  • New Income Tax Brackets come into effect


7th July

  • Income tax return due for the period ending 31 March 2024 for DIY filers or entities without an extension of time.

65 views0 comments

Comments


dc&a logo note black.png
bottom of page