Heads up for businesses: 3 labour related law changes in 2017

Date: 24th March 2017

If you’re a business that employs staff or uses contractors, here are some important law changes coming into effect from 1st April 2017 that will probably impact your business. The changes include the way contractors pay tax, an increase in the minimum wage and a phased-in decrease in ACC work levy rates.

1. Contractors and tax

From 1 April 2017, the way contractors pay their taxes will change, giving greater choice and making it easier to get tax right.

This is an expansion of existing rules called schedular payments. These rules previously applied to workers in certain industries, eg forestry and real estate, who were taxed at a flat rate. The expanded rules are compulsory for all contractors hired by a recruiter — or other labour hire business — and those previously under schedular payment rules.

Other contractors can opt in if their payer agrees to deduct tax on their behalf.

More about this change at  business.govt.nz

2. Minimum Wage increases

The current minimum wage is $15.25 for an adult. From 1st April 2017 the new rates will be:

  • Adult — $15.75 an hour
  • Starting-out — $12.60 an hour (up from $12.20)
  • Training — $12.60 an hour (up from $12.20)
  • Starting-out and training minimum wages are 80% of the adult minimum wage.

More about this change: business.govt.nz

3. Decreased ACC Work Levy rates being phased in

Whether you’re an employer or self-employed your Work Levy will go down by an average of 10% over the next two years, compared with 2016/17 rates. Exactly how much will depend on your industry and classification unit and how much you earn, so it could be a bit more or less.

You don’t need to do anything — ACC will calculate your new levy, which will appear in your next invoice. And you’ll still get the same workplace cover, eg compensation for lost wages or the cost of physiotherapy and surgery.

More about this change: business.govt.nz

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