Employment law update

Employers cannot deduct compulsory KiwiSaver from those on the minimum wage: A recent Court of Appeal decision4 has confirmed that compulsory employer KiwiSaver contributions cannot be deducted from the minimum wage paid to employees. This decision upheld an Employment Court decision that said the purpose of the minimum wage was to ensure workers received base wages to allow them to meet living expenses. A component of savings for retirement was not built into the minimum wage.

No offsetting high and low season wages: More on the minimum wage … the Employment Relations Authority recently ruled that employers cannot average out weekly pay over a season. There can be no offsetting high season wages against wages paid in the low season.

Any salary package must be at least at the level of the minimum wage, currently $13.75/hour. If you have an employee paid on a daily rate, the minimum is $110/day and $13.75/hour for each hour exceeding eight hours worked that day. On a weekly basis, the minimum is $550/week and $13.75/hour for each hour exceeding 40 hours worked by your employee that week.

We remind all employers that you must keep accurate and timely records for all your employees’ wages.

New tax deduction law for bach owners

With the holiday season almost upon us, bach owners might want to study up about the relevant changes to the rather bizarrely-named Taxation (Livestock Valuation, Assets Expenditure and Remedial Matters) Act that came into force on 17 July 2013.

This legislation tightens the rules around deducting expenses related to assets that are used privately by the owner and also used to earn income. Holiday homes, boats, yachts and aircraft – mixed use assets – all come under this IRD net.

Simply put, under the new legislation expenses relating to both private and paid use of the asset (such as rates and electricity) will be apportioned using a new formula. There’s an additional requirement that owners need to earn at least 2% of the property’s Rateable Value in any given tax year if they want to claim expenses in excess of income derived from the asset.

This legislation applied to bach owners from 17 July 2013. Owners of other mixed use assets such as aircraft, boats and yachts have a reprieve until the tax year ending 31 March 2015.

To find out more on how this legislation may affect you, go to: http://www.ird.govt. nz/business-income-tax/expenses/holiday-homes/

Trust law to be overhauled

As you may be aware, the Law Commission published its review on trusts in September. The Commission has recommended changes to the legislation dealing with trusts including giving courts the ability to order the transfer of trust assets to compensate disadvantaged partners following marriage or other relationship breakdowns.

Law Commission President, Sir Grant Hammond, said it was in the public interest “to have a modern statute that gives trustees and others guidance as to how a trust is to be managed and increases the accountability of trustees”.

We will keep you abreast of developments.