MILEAGE REIMBURSEMENT – Paid higher than IRD Prescribed Rate
Do you use the mileage rate set by the IRD, and did you leave it at the higher rate when it dropped this year? Did you know that if you decided to leave the mileage rate at either 77c (2014 rate) or 74c (2015 rate) per kilometre and didn't reduce it to 72c (2016 rate), every cent above the 72c is taxable as it is a Fringe Benefit? It should be taxed either by PAYE or FBT.
Our recommendation is that you use the actual prescribed rate by the IRD, currently 72c, or an alternative IRD approved estimate e.g. AA to reimburse your employees for use of their private vehicle for employment related use.
We also recommend that you review your employment agreements and if an actual rate is prescribed, we recommend you go through 'due process' with your employees and amend the clause to reimburse at current IRD approved mileage rates.
If you would like assistance with your employment agreements, please contact us and we will refer you to an HR consultant.
For further information, go to: http://www.ird.govt.nz/business-income-tax/expenses/mileage-rates/
AgBRIEF Article – WAIKATO FARMERS STUNG ON PAPERWORK!
In a recent AgBRIEF article, half of the 28 Waikato dairy farms that MBIE officials visited in the last two months were in breach of their employment obligations, and farmers were fined. The Labour Inspectorate has promised a nationwide crackdown on employers who fail to keep written employment agreements or time records. Maximum fines can reach $20,000 for serious breaches.
All your employees should be keeping timesheets, and the DairyNZ website has an excellent template. Check out the template and other important documents at http://www.dairynz.co.nz/people/manage/getting-organised/
Ace Payroll integrates with Cashmanager RURAL
Many farming businesses now use a payroll system to record employee wage information and Cashmanager RURAL allows for easy importing with Ace Payroll. You can import your employee wage information into your Cashmanager RURAL farm business. Each wage can be broken down into a multi-line transaction displaying gross, PAYE and any deductions or allowances which can be automatically coded.
Check out: http://www.crssoftware.co.nz/cashmanager-rural-integrates-payroll/
KiwiSaver Employer Deductions & 'TOTAL REMUNERATION'
We have recently assisted clients with issues over incorrect KiwiSaver calculations and total remuneration. Here is a brief example of how 'TOTAL REMUNERATION' works in payroll in the farming industry.
Base salary $40,000pa, accommodation $150 per week ($7,800pa) & KiwiSaver 3% Employer contribution ($1,200pa) = Total remuneration package $49,000pa.
WEEKLY PAYSLIP CALCULATIONS
Accommodation allowance $150.00*
Salary $40,000$769.23
TOTAL GROSS $919.23
Less PAYE – tax code M $155.34
Less Accommodation deduction $150.00
Less KiwiSaver Employee 3% $ 23.08 *Accom Allow exempt
NET PAID TO EMPLOYEE $590.81
KiwiSaver Employer 3% less ESCT $ 19.05*Accom Allow exempt
ESCT 17.5% $ 4.03*Accom Allow exempt
To explain 'Total Remuneration' to your employee, see example below:
Total gross earnings $919.23 + KiwiSaver Employer 3% net $19.05 + ESCT $4.03 = $942.51 X 52 WEEKS = $49,000pa
If you have any queries, please don't hesitate to contact our Payroll team for clarification!
Payroll team at Accounted4
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Kathryn Leong Extn. 859
Do you use the mileage rate set by the IRD, and did you leave it at the higher rate when it dropped this year? Did you know that if you decided to leave the mileage rate at either 77c (2014 rate) or 74c (2015 rate) per kilometre and didn't reduce it to 72c (2016 rate), every cent above the 72c is taxable as it is a Fringe Benefit? It should be taxed either by PAYE or FBT.
Our recommendation is that you use the actual prescribed rate by the IRD, currently 72c, or an alternative IRD approved estimate e.g. AA to reimburse your employees for use of their private vehicle for employment related use.
We also recommend that you review your employment agreements and if an actual rate is prescribed, we recommend you go through 'due process' with your employees and amend the clause to reimburse at current IRD approved mileage rates.
If you would like assistance with your employment agreements, please contact us and we will refer you to an HR consultant.
For further information, go to: http://www.ird.govt.nz/business-income-tax/expenses/mileage-rates/
AgBRIEF Article – WAIKATO FARMERS STUNG ON PAPERWORK!
In a recent AgBRIEF article, half of the 28 Waikato dairy farms that MBIE officials visited in the last two months were in breach of their employment obligations, and farmers were fined. The Labour Inspectorate has promised a nationwide crackdown on employers who fail to keep written employment agreements or time records. Maximum fines can reach $20,000 for serious breaches.
All your employees should be keeping timesheets, and the DairyNZ website has an excellent template. Check out the template and other important documents at http://www.dairynz.co.nz/people/manage/getting-organised/
Ace Payroll integrates with Cashmanager RURAL
Many farming businesses now use a payroll system to record employee wage information and Cashmanager RURAL allows for easy importing with Ace Payroll. You can import your employee wage information into your Cashmanager RURAL farm business. Each wage can be broken down into a multi-line transaction displaying gross, PAYE and any deductions or allowances which can be automatically coded.
Check out: http://www.crssoftware.co.nz/cashmanager-rural-integrates-payroll/
KiwiSaver Employer Deductions & 'TOTAL REMUNERATION'
We have recently assisted clients with issues over incorrect KiwiSaver calculations and total remuneration. Here is a brief example of how 'TOTAL REMUNERATION' works in payroll in the farming industry.
Base salary $40,000pa, accommodation $150 per week ($7,800pa) & KiwiSaver 3% Employer contribution ($1,200pa) = Total remuneration package $49,000pa.
WEEKLY PAYSLIP CALCULATIONS
Accommodation allowance $150.00*
Salary $40,000$769.23
TOTAL GROSS $919.23
Less PAYE – tax code M $155.34
Less Accommodation deduction $150.00
Less KiwiSaver Employee 3% $ 23.08 *Accom Allow exempt
NET PAID TO EMPLOYEE $590.81
KiwiSaver Employer 3% less ESCT $ 19.05*Accom Allow exempt
ESCT 17.5% $ 4.03*Accom Allow exempt
To explain 'Total Remuneration' to your employee, see example below:
Total gross earnings $919.23 + KiwiSaver Employer 3% net $19.05 + ESCT $4.03 = $942.51 X 52 WEEKS = $49,000pa
If you have any queries, please don't hesitate to contact our Payroll team for clarification!
Payroll team at Accounted4
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Kathryn Leong Extn. 859
