The NZ EOFY checklist outlines the activities that you will need to complete to close off the 2020/21 financial year and prepare your system for the next financial year (2021/22).
The process outlined in this article applies only to users of the payroll module in New Zealand.
Please read this checklist carefully and familiarise yourself with the linked Help Centre articles before you start your EOFY preparations:
|Closing off FY 2021/21|
|Process final pay runs for 2020/21 financial year||All pays that need to be paid on or before 31 March 2021 are complete and marked as “Paid”|
|Lock 2020/21 Financial Year||Locking the financial year in the system will prevent any further pays being processed with pay dates in that financial year.|
|Reconcile payroll activity||Reconcile Financial data for payroll, PAYE tax, KiwiSaver and Deductions|
|Preparing the system for FY 2021/22|
|Update pay rates, charge rates and insurance rates||
Pay and charge rates have been updated on jobs and/or rate cards
Insurance Rates have been updated on jobs
|ESCT Rate updates*||
ESCT rates have been updated for all employees
*ESCT rates will be calculated by the system for employees paid in Astute in the 20/21 FY. For those that did not pay in Astute for the entire 20/21 FY, please review system generated rates and update if required.
What’s New in 2021/22
Minimum Wage Increase
From April 1 the adult minimum wage is increasing to $20 per hour.
Starting-out and training minimum wages will also increase to $16.00 per hour.
Make sure you’re prepared and have updated pay and charge rates on jobs and/or rate cards. Also ensure any changed insurance rates have been updated on jobs if applicable.
More information on the minimum wage increase is available here.
Rate and Levy Changes
New Tax Codes
In line with updates to the Taxation (Income Tax Rate and Other Amendments) Act 2020, two new tax codes will be introduced for the 21/22 FY.
Tax Codes SA and SA SL will apply for those that have Secondary Income greater than $180,000 and Secondary Income greater than $180,000 with Student loan respectively. These new tax codes will be available for selection on the employee profile from 1 April 2021.
The existing ST and ST SL tax code descriptions will be updated accordingly, as they will now apply for those that have Secondary Income between $70,000 and $180,000 or Secondary Income between $70,000 and $180,000 with Student Loan.
ACC Earners Levy
The ACC Earners’ Levy maximum liable earnings will remain at $130,911 for the 2021/22 FY. Likewise, the minimum liable earnings remains at $36,816.. There is also no change to the ACC Earners Levy Rate, this remains at 1.39%.
Student Loan Repayment Threshold
Effective 1 April 2021, the 2021/22 annual repayment threshold is $20,280. This means the new weekly threshold is $390, fortnightly threshold is $780, 4 weekly threshold is $1560, and monthly threshold is $1690
Repayment rates remain at 12% per dollar over the repayment threshold for primary income, and 12% for secondary income.
New ESCT Rate
A new ESCT rate has been introduced for the 21/22 FY. For those earning greater than $216,001, a new rate of 39% will apply for ESCT calculations. The previous rate of 33% will apply to those earning between $84,001 and $216,000.
From 1 April 2021, the IRD will require additional information to be reported when an Employee Details (ED) file is submitted. The ED file will now include:
- Whether an employee is a KiwiSaver member;
- The reason that an employee is not eligible for KiwiSaver; and,
- Whether employees are casual or temporary employees.
These pieces of information will only be reported for new employees who have not yet been reported to the IRD. Existing employees do not need to provide these details.
The KiwiSaver section of an employee’s Tax & Super tab includes a checkbox to nominate the employee’s KiwiSaver membership. Employees who have opted in to KiwiSaver should have this checkbox ticked in their profile.
The Eligible for KiwiSaver drop-down is where you can indicate the reasons that an employee is ineligible. You can set eligible employees to ‘Yes’ or select the appropriate reason if an employee is not eligible.
Casual or Temporary Employees
Casual or temporary employees will be reported to the IRD using the existing Engagement section in the employee’s Employment tab. Selecting Casual as the Engagement Type will indicate a casual/temporary employee.
PAYE Tax Code Calculation Update
On 1 April 2021 (overnight 31 March 2021), the 2021/22 tax code updates will come into effect on the Astute Payroll system.
We will apply the new tax code updates to your portal, so you won’t need to do anything to enable these.
The system will only apply the updated tax code calculations to pay runs with a pay date on or after 1 April.
If you have pays sitting in Process Payroll prior to 1 April you will need to change the pay date and recalculate the pays for the system to calculate the correct tax rates for the 2021/22 financial year.