1st April 2021 and a new financial year are just around the corner. Are you ready for the employment law and tax changes that will take place? Find out more below.
o Minimum wage effective 1 April
o Tax rate changes effective 1 April
o Increased minor asset write off thresholds
o Depreciation on buildings
If you have not yet talked to your accountant or payroll advisor to check your employment records, systems and processes are current, now is the time. A reminder – on 1 April the new minimum wages will be:
- $20/hour for adults (increased from $18.90)
- $16/hour for starting-out and training wages (increased from $15.12)
All rates are before tax and before any lawful reductions including student loan repayment and child support.
Here’s how you can prepare:
- Advise any employees on minimum wage, or starting-out and training wage, that there will be an increase.
- Make sure whoever is responsible for your payroll system is ready to implement the change. Now is also a good time to check your employees contracts and if there are any changes in eligibility for your employees in regards to their wage.
- You may also wish to consider the potential impacts on your business of the increase in wages. For example, how does the wage increase affect the differences in pay with other employees? You may also wish to budget for this increase in the short and longer term.
For more help and advice on the minimum wage increases including how it affects your business, give us a call.
Tax rate changes
On 1 April the new tax rate of 39% for income over $180,000 will come into effect. The new rate will apply to all income over the $180,000 threshold including extra pay earned in the course of employment such as bonuses, back pay, redundancy and retirement.
Increased low-value asset write-off thresholds
The government increased the low-value asset threshold for depreciation in March 2020 from $500 – $5,000. This allowed businesses to deduct the full value of assets up to $5,000 in the year they were purchased. On 17 March 2021 this threshold will reduce back to $1,000 – still double what it was in 2019.
Depreciation on buildings
For the 2020-2021 tax year onwards businesses will be able to claim depreciation on commercial and industrial buildings. These changes help
- with short term cash flow
- to allow investment in buildings in the longer term
The applicable depreciation rates are 2% DV and 1.5% SL.
Here to help
If you would like support to prepare for the minimum wage increase, or help with your business tax for 2020-2021 year and beyond, give us a call.