Are you ready for payroll changes from 1 April?

There are a number of changes to your payroll that come into effect from Friday 1 April 2022. We share these here and if you want to discuss how these impact your business, don’t hesitate to call your business advisor.

Minimum Wage Increase

Adult                              Increasing from $20 to $21.20

Starting out / training     Increasing from $16 to $16.96

Student Loan Threshold Increase

Student Loan payments are deducted on earnings over the threshold amount at a rate of 12%. The threshold is increasing from $20,280 to $21,268 per year.

The rate change will be effective for the first pay run after 1 April 2022.

$409 per week

$818 per fortnight

$1,636 per four weeks

$1,772.33 per month

ACC Levy increase for 2022/2023 year

Increasing from 1.39 percent to 1.46 percent.  For every $100 gross this will be $1.46.  Effective from the first pay run after 1 April 2022.   ACC is part of the PAYE content deducted from wages.

The thresholds are:

Income                             Tax rate + ACC Levy

Up to $14,000                   10.5% plus ACC 1.46%

$14,001 to $48,000          17.5% plus ACC 1.46%

$48,001 to $70,000          30% plus ACC 1.46%

$70,001 to $136,544        33% plus ACC 1.46%

$136,544 to $180,000      33% no ACC*

Over $180,001                 39% no ACC*

*Earnings greater than $136,544 do not have the ACC levy applied.

Employer KiwiSaver Contribution - ESCT Tax Rates

The Employer’s KiwiSaver Contribution is taxed, and this percent is dependent on the employee’s expected annual income.   

These rates need to be reviewed for the start of the new tax year.

To do this, look back at the employee’s gross earnings for the past 52 weeks (or relevant period and divide by the number of paid weeks, then multiply by 52 to get an estimated annual income).

Check their ESCT rate and update if necessary.  These are:

Expected Annual Income             Tax Rate
$0 to $16,800                                   10.5%   

$16,801 to $57,600                          17.5%

$57,601 to $84,000                          30%

$84,001 to $216,000                        33%      

$216,000+                                        39% 

Processing wages at the end of March 2022 / beginning of April 2022

Pay period end dates are generally different from an employee’s actual pay day.

The pay day date is the one that is used for pay day filing to Inland Revenue.

As the ACC / PAYE taxation rates are changing from 1 April you may need to change your pay day back to March if it is for a pay period end date in March.

e.g. W/e 27-3-2022 (Sunday) – pay day up to Thursday 31 March will be ok.  If your pay day is Friday 1 April, then you should shift the pay day to Thursday 31 March.

Payroll Software will be updated but if you are using the manual PAYE calculator you will need to use the 2023 year after 1 April.  These are available via the IRD site - PAYE Calculator.

If you want to discuss how these changes impact your business, don’t hesitate to get in touch.