Gilmore Taylor Associates Ltd Blog

Parliament passes changes to Employment Relations Act

The Employment Relations Amendment Act 2018, passed in Parliament yesterday, changes employment law with the aim to improve fairness in the workplace and deliver decent work conditions and fair wages.

The Act restores protections for employees, especially vulnerable employees, and strengthens the role of collective bargaining in the workplace. Many of the changes are familiar to businesses, as they roll the law back to how it was as recently as 2015.

The key changes include:

  • reinstating prescribed meal and rest breaks
  • strengthening collective bargaining and union rights
  • restoring protections for vulnerable workers, such as those in the cleaning and catering industries, regardless of the size of their employer
  • limiting 90-day trials to business with fewer than 20 employees.

Most changes take effect at two stages: the day after Royal assent (expected Friday 7 December 2018), and on Monday 6 May 2019.

Changes under the Employment Relations Amendment Bill 2018

Inland Revenue walks the talk on payday filing

Inland Revenue has become the country's first big employer to adopt payday filing ahead of it being mandatory on 1 April next year.

Customer segment leader Richard Owen says switching early makes good business sense.

"There are 5,138 staff to pay every fortnight at Inland Revenue so waiting until April to adopt a new system didn't seem a sensible option."

"We have been telling all employers that it's better to switch sooner rather than later and there's no point in saying that unless you're prepared to practice what you preach."

More than two months of pay runs with payday filing have been successfully completed at Inland Revenue. This means all the PAYE and deduction information about its employees has been filed at each fortnightly payday instead of monthly.

Receiving this type of information on a timelier basis will allow Inland Revenue to be more accurate when calculating taxes and social entitlements such as Working for Families tax credits.

It's also a key part of the proposed plan to simplify end-of-year taxes for individuals.

"One of the benefits of Inland Revenue switching early," says Mr Owen, "is that it has taught us some valuable lessons we can share with other significant employers.

"We're intimately aware of the planning involved in the switch, especially when there's a large number of staff to pay. We've drawn on our experience to create easy-to-use guides to help employers using the same payroll software through each step of the process."

Inland Revenue Chief People Officer Mark Daldorf says the developer of the payroll software package the organisation uses has been helpful with resolving obstacles.

"Pay runs so far have gone well and we've seen only a few minor, but resolvable issues, for a few staff with unique circumstances.

"Like any new process, it takes some getting used to, especially how the employment information is displayed in myIR but we've been able to quickly adapt to the new look and feel."

Mr Owen says Inland Revenue is willing to help employers adopt payday filing in any way it can.

"We've shown that it's possible to shift to payday filing well ahead of the deadline so other large employers should feel confident they can do the same.

"The first step is to start talking with your payroll software provider and work out a plan to get you ready well in advance."

Inland Revenue launches public campaign


Inland Revenue launches public campaign to explain the

biggest tax changes in a generation


Today Inland Revenue kicks off a major public information campaign to tell New Zealanders what the biggest changes to the tax system in a generation will mean for them.

Almost every household and business will be affected and the campaign, including print, radio and online advertising, a website, and direct communications to wage and salary earners, will continue well into next year.

Inland Revenue Commissioner Naomi Ferguson says that, subject to Parliament passing all the necessary legislation, the April 2019 tax year will see a fundamental shift in the way New Zealanders interact with the revenue system.

"For the first time, automated tax assessments will see around 1.67 million New Zealanders get a tax refund paid straight into their bank account," she said.

"About 720,000 of those people will not have had any recent contact with IR, some not for 20-years or more, so it may come as a surprise. That's why we're running this campaign – to make sure as many people as possible understand what's happening.

"And of that 720,000 about 530,000 will be beneficiaries and people who earn less than the minimum wage and have never applied for a tax refund before.

Ms Ferguson said more than 330,000 Working for Families customers would benefit from the new process with IR getting their wage and salary information immediately, allowing IR to adjust payments so customers are always getting the right amount.

"So much of this automation is made possible by the new payday filing process where IR will get your payroll information on your paydays instead of employers having to do a separate report to us once a month. Payday filing is mandatory from 1 April and many have started already. 

"And for investments, the new system will see dividend and interest payments reported to IR more frequently by the banks and others who make the payments, so that taxpayers receiving them don't have to," said Ms  Ferguson.

Ms Ferguson said that despite a lot of change being introduced, most people would pay and receive the right amounts during the year without having to do anything. "That's the point of all these changes," she said, "to make tax easier and more accurate for New Zealanders.

"Come the April 2019 tax year our transformation process will see the 'big ticket' items -  GST, provisional tax, income tax, Working for Families and investment, all on the new system.

"The next steps, in the coming two to three, years will see child support, student loans and Kiwisaver bought in as well. We've made a lot of progress and will continue to do so."


Electronic payments the way of the future

The days of being able to pay your tax bill with a post-dated cheque are coming to an end as Inland Revenue moves with its customers, away from cheques towards electronic payments.

Inland Revenue spokesperson Meade Perrin says the plan is to stop accepting post-dated cheques in February next year.

"Payments New Zealand figures show 67 out of every 68 payments in New Zealand are electronic and there's a 20% decline year on year in the use of cheques generally.  So we're encouraging our customers to go with the trend and move to the simpler, easier and more certain electronic payment methods," Mr Perrin says.

"Customers send Inland Revenue around half a million cheques each year.  That's 4.5% of the total payments we receive. Around 17% - or more than 85,000 cheques - are post-dated.

"Instead of post-dating a cheque, and mailing it in, customers can use internet banking to set the date a payment comes out their bank account. That has the same effect as a post-dated cheque – the payment's made on time, when the customers want it to be made and won't be forgotten.

"There will be some impact on customers who're used to post-dating cheques but we're confident that can be worked through given most banks have a simple and convenient system for electronic payments.

"Compared with electronic payments, cheques are expensive to process and the technology used to process them, both by IR and banks, is approaching the end of its working life.

"Technology is more and more becoming part of our everyday lives and there's already been a significant shift to using digital methods for paying tax and receiving refunds, with 95.5% of all payments received by IR already digital. 

"We want to keep that momentum building and ease taxpayers towards digitising all their payments," Meade Perrin says.

Options for payment:

• Electronic via internet banking or direct debit in MyIR. Paying this way minimises delays and includes a formal notification of the date and time the payment was made to Inland Revenue. 

• Customers can make payment by debit/credit card over the phone, through the unauthenticated payment page the Inland Revenue website, and through myIR. 

• Taxpayers can also set up direct debits in myIR.

Cash or eftpos are still payment options but only at Westpac branches. They're not accepted at Inland Revenue offices.

New GST rules to level playing field


New GST rules to level playing field

Overseas companies selling goods online into New Zealand will soon be required to collect GST in the same way as domestic retailers.

Speaking at the Chartered Accountants Australia New Zealand tax conference today, Stuart Nash said that new rules would be aimed at imported goods valued at or below $1,000. Customs would retain responsibility for collecting GST on imported parcels valued more than $1,000.

"There are about 26,000 small businesses in New Zealand employing more than 62,000 people in the retail sector. Many are in competition with foreign firms who sell exactly the same product into our market without collecting GST," says Mr Nash.

"We intend to make offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees. This will simplify compliance and administration costs at the border.

"GST has been collected on services and digital products from offshore, such as streamed movies and music, since 2016. This extends that to goods.

"With the steady growth in online shopping from offshore suppliers, a significant amount of tax revenue is being lost. Mostly though, it's a matter of fairness so the sooner we get this in place the better. This measure aims to help level the playing field and improve the integrity of our tax system.

"Our new rules have been endorsed by the Tax Working Group and will be broadly similar to those introduced by Australia in July. The EU has also committed to following this approach," says Mr Nash.


ACC to make refunds as new system reveals business levy overpayments

Released 11/10/18


ACC will refund over 300,000 business customers after uncovering two historical overpayment issues, says Head of Business Customer Service Delivery, Phil Riley.

These issues are:

  • We'll refund all first-year levies collected since 2002 from self-employed customers, who worked fulltime (ie averaged over 30 hours per week across the financial year). This affects approximately 106,000 customers and equates to approximately $36 million in levies.
  • We'll also refund about $64 million to around 200,000 businesses who paid provisional invoices over the same period, in situations where they were not required to do so.

We'll also be paying interest but it's too early to say how much it will be in total.

The overpayments date from 2002, and total around $100 million or 0.37% of the levies collected from the Earners and Work accounts over that period. They were uncovered during preparations for a new levy system.

Refunds to begin in October 2018

"We'll begin refunding customers this month," says Phil Riley.

"The average refund works out at about approximately $340 (excl GST) for first-year self-employed, and $415 (excl GST) for provisional payments. 

"We very much regret the overpayments and apologise to anyone who made a payment that was not required. Our focus is now on making this right as soon as we can, and we have already begun contacting affected customers.

Check if you're due a levy refund.

New system reveals overpayments

"ACC has been true to the intent of the regulations that newly self-employed people, such as all business owners, should pay a levy. However, we discovered last year that since 2002 the regulations have been drafted in a way that doesn't provide for the levying of first-year self-employed to occur.

"We became aware of the drafting issues while preparing to replace our old levy system, which included a legal check that the new system would be compliant with regulations. When we found the problem, we immediately stopped invoicing all newly self-employed people. 

"We've taken the opportunity to consider how we invoice all self-employed people. We're currently seeking feedback during levy consultation on a proposal that will switch to an arrears approach similar to how self-employed customers pay income tax."

Phil Riley says preparations to migrate data to ACC's new levy system uncovered the second issue of provisional invoices being paid by businesses that had subsequently ceased trading or changed their business structure but not informed ACC.

"Since these two issues were uncovered, we've been working on a number of actions to clear the way for refunds. This includes:

  • verifying the extent of the problem
  • working with MBIE to assess if wider actions such as legislative change were required
  • introducing our new levy system, which provides a permanent fix and allows automated reimbursements.

How long we expect it may take

"We expect it may take until April 2019 year to complete the refund process. We'll work with Inland Revenue, the Companies Office, and searching public records to trace people if we hold no current contact details. In the meantime, we strongly encourage customers to update their contact details through our form.

Phil Riley says the total refund has been factored into the levies that ACC is currently consulting on. ACC's funding policy requires it to spread impacts over 10 years, so the refund accounts for a one cent increase in the Work Account (where a levy reduction is proposed), and well under one cent for Earners (where a 2.5% increase is proposed).


A phishing campaign containing malware is targeting business banking customers of some New Zealand banks.

The phishing emails are branded to look like invoice notifications from accounting software systems. Once a user clicks on the attachments or links in the email, malware is downloaded onto the user's machine.

The phishing emails may have been sent up to three months ago.

Click here to find out what's happening.


Planned contacts with employers about payday filing

This is to let you know that Inland Revenue will be sending emails and letters to all employers on the 15th of October.  They'll be reminding you of the shift to payday filing by 1 April 2019.

They will also be calling employers from late October 2018 through to April 2019 to encourage employers to shift early and talk them through the process.

If you are using payroll software, this may not yet be updated to allow for payday filing, your software provider should be keeping you up to date with the progress.

Please contact us if you require any further information.


Government ramps up R&D tax incentive

The Coalition Government is backing businesses to succeed with a new tax incentive that aims to unlock further spending on research and development.

Research, Science and Innovation Minister Megan Woods and Revenue Minister Stuart Nash today announced the design of the research and development (R&D) tax incentive following extensive consultation with businesses.

"We listened to the business community. We ran a thorough consultation process and as a result we have made significant changes to the tax incentive originally proposed. The rate will be higher, the threshold lower, and the definition more inclusive.

"This is a huge opportunity for businesses to invest in R&D, which will help us increase our productivity and boost wages.

"We pride ourselves on being an innovative country, but our spending on R&D lags behind many of our international competitors, and this Government is not content to languish at the bottom of the table. That's why we've set aside $1 billion for this incentive.

"Work to increase R&D spending to two per cent of GDP over 10 years was part of the Coalition Agreement between Labour and New Zealand First. This incentive puts us on the path to achieving this goal," said Megan Woods

Revenue Minister Stuart Nash said these features struck a balance between including as many businesses as possible in the scheme, and upholding the integrity of New Zealand's tax system.

"We have learned from international best practice how to incentivise R&D expenditure and retain trust and confidence in the tax system. The new policy meets the rigour of international schemes, and will support businesses to undertake genuine R&D.

"We received a lot of feedback from businesses that it was particularly important to include a form of refundable tax credits for start-ups and loss making businesses in the first year of the tax incentive. This is why we have introduced a temporary measure that will mirror the current R&D tax-loss cash-out scheme.

"I can assure all businesses that having a more comprehensive form of refunds in the R&D tax incentive is a high priority to have in place for the 2020 tax year," said Stuart Nash.

Help shape ACC levy rates for 2019-2021

Help shape ACC levy rates for 2019-2021

All Kiwis are invited to have their say on the proposed changes to levies before the ACC Board makes its final recommendations to the ACC Minister for a decision, says ACC Board Chair, Dame Paula Rebstock.

"ACC encourages everyone to make a submission on any aspect of what's being proposed, and provide their insight into where ACC should be focusing its future efforts."

Levy proposals

The proposed levies are generally lower than those forecast in 2016. The proposals for the 2019-2021 levy period include:

·         decreasing the average work account levy for employers from $0.72 to $0.67 for every $100 of liable earnings. This is a decrease of 6.9%.

·         increasing the earners' levy for workers from $1.21 to $1.24 for every $100 of liable earnings. This is an increase of 2.5%.

·         increasing the average motor vehicle levy for road users from $113.94 to $127.68 including a proposed increase of 1.9 cents per litre for petrol. This is an increase of 12.1%. 

Drivers of change

"Since we last adjusted levies in 2016, the number of claims for injuries has grown by 6.4%, with more people than ever needing our support," says Dame Paula Rebstock.

Pressures on costs include:

·         increasing medical costs

·         increased costs for care and support workers resulting from the pay equity settlement agreed by Government

·         the introduction of free doctor visits for under 14s

·         increases in weekly compensation claims.

"In addition, the impact of lower interest rates on our investments, and higher inflation forecasts will have a significant influence on future costs. These factors need to be reflected in the levy rates now to ensure that we can support our clients' needs throughout their lifetime."

"Despite the cost pressures, our investment in injury prevention and ongoing changes to the way we work are having a positive impact. Over the past two years, we've also achieved higher investment returns than forecast.

"This is helping us to manage increasing costs, and, with the exception of the motor vehicle account which is slightly higher than anticipated, we've kept levies from increasing as much as we had thought in 2016," says Dame Paula Rebstock.

Lower than predicted

Prudent management is helping to keep levies from increasing as much as ACC anticipated in 2016.

Work levy

ACC has been able to reduce the work levy for employers and self-employed because people requiring weekly compensation are returning to work sooner than expected and over the past two years we've achieved higher investment returns than we had forecast.

Earners' levy

People are tending to lead more active lives, exposing themselves to greater risk. This leads to more claims, which increases the need to raise levies.

However, the proposed levy is significantly below ACC's original forecasts in 2016, where ACC predicted that an increase of 9% would be needed for the levy we collect from Kiwi wages ($1.32 per $100 of liable earnings) to pay for increased treatment and compensation costs.

"It is also considerably below what workers were paying in 2011 and 2012 when the Earners' levy peaked at $1.78. That's 44% higher than the rate of $1.24 we're proposing for the next two years."

Motor Vehicle levy

The cost of supporting injured customers has continued to increase. The biggest driver has been pay equity.

However, for road users, the increase is significantly below what motorists had to pay in 2013 and 2014 when the average Motor Vehicle Account levy peaked at $333. That's more than $200 higher (161%) than the rate we're proposing for the next two years.

Have your say

ACC is taking the consultation to the streets of New Zealand with a roadshow to nine towns and cities featuring a new 'Ask the Nation Station'. It's an 'out-of-the-box' way of getting out to communities to encourage comment and participation.

You can find out more detail and provide your feedback on our consultation website.