Helpful Rates & Rules

With so much to think about and consider when running a business, we thought it would be useful to refresh our memories on a few key rates and rules that are used in our everyday business lives. These rates and rules come into play when we are looking at doing budgets or any forward planning for our businesses.

Tax Rates

Individuals

There is a marginal tax rate system in place for us as individuals:

Earnings up to $14,000	10.5%
Earnings between $14,001 and $48,000	17.5%
Earnings between $48,001 and $70,000	30%
Earnings over $70,000	33%

Companies

There is a marginal tax rate system in place for us as individuals:

Companies are taxed at a flat rate	28%

Trusts

There is a marginal tax rate system in place for us as individuals:

Companies are taxed at a flat rate	33%

Kilometre Rate Rules (previously known as Mileage Rate Rules)

If an employee uses their private vehicle for business purposes, you can pay them a tax-free reimbursement. This reimbursement amount is based on a per-kilometre rate set by the IRD. There are different rates depending on how many kilometres the employee does in a year and what sort of vehicle they are driving.

The Tier One rate covers both fixed and running costs and is used for the business portion of the first 14,000 kilometres travelled by the vehicle in a year. The employee is going to have to keep a logbook in order to keep track of total kilometres travelled.

The Tier Two rate covers the running costs only and is used for the business portion of any travel over 14,000 kilometres travelled.

The rates set by the IRD for the 2018 / 2019 tax year are as follows. These rates will be reassessed annually by the IRD.

Vehicle Type	Tier One Rate	Tier Two Rate
Petrol or Diesel	79 cents	30 cents
Petrol Hybrid	79 cents	19 cents
Electric	79 cents	9 cents

Minimum Wage

The minimum wage rates (before tax) that will apply from the 1st April 2020 are:

Type of minimum wage	Per Hour	Per Hour
	From 1 April 2020	Up to 31 March 2019
Adult	$18.90	$17.70
Starting Out	$15.12	$14.16
Training	$15.12	$14.16

To see the definitions of the types of minimum wage click on this link: https://www.employment.govt.nz/hours-and-wages/pay/minimum-wage/different-types-of-minimum-wage-rates/

Meal breaks

From the 6th of May 2019 the Employment Relations Act, 2018 required that employees have set rest and meal breaks, so they can have time to rest, refresh and attend to personal matters. The number and duration of the breaks will depend on the hours worked.

Click on this link for more detailed information:
https://www.employment.govt.nz/hours-and-wages/breaks/rest-and-meal-breaks/

The new financial year starts on the 1st April so if you need any assistance with putting together a budget or cash flow taking the above rates and rules into consideration then please contact us.

Rachel Lamb