News
Holiday Pay and Parental Leave
An employee's annual leave entitlement accrues while they are away on parental leave as the leave is considered to be part of the employee's continuous service. However, a little known fact amongst employers is that the method of calculating holiday pay for employees who have returned from parental leave is different to the normal holiday pay calculation.
Holiday pay is normally calculated as the higher of wither the average weekly earnings for the last 12 months immediately before the end of the last pay period before the holiday is taken, or the employee's ordinary weekly pay at the beginning of the holiday. However the calculation changes when the employee takes holidays in the 12 months following parental leave.
The calculation for holidays taken within 12 months of return from parental leave is based on the average weekly earnings for the 12 months immediately before the end of the last pay period before the holiday, and is not compared to the ordinary weekly pay. This means that it is very likely that the amount of holiday pay maybe less then the employee is expecting.
It is important that both employers and employees are aware of the difference in calculation methods before annual leave is taken.
If you have any questions about the above or for more information please contact us.
Depreciation
IRD has issued new depreciation rates for residential rental property chattels effective from 1 april 2011. For more information contact us.
Buildings can no longer be depreciated effective 1 April 2011. Carparks (buildings and pads) can still be depreciated.
Tax Avoidance
IRD has a new weapon - what did Parliament contemplate! Given that Inland Revenue writes the law and advises Parliament and MP's don't have a clue - arguably Parliament contemplated what ever Inland Revenue contemplated. So logically, if Inland Revenue doesn't like what a taxpayer does with the law it recommends to Parliament and writes - it will yell TAX AVOIDANCE! Unfortunately - if it yells - the Courts will generally agree.
This was the basis of the decision in Penny & Hooper where the Supreme Court confirmed that schemes and arrangements entered into with the purpose of avoiding tax although structurally correct are still caught by the anti avoidance provisions of the Income Tax Act.
Gift Duty
Gift Duty has been abolished - What are the implications? - For more information contact us.
Family Tax Credit
Family Tax credits for children aged under 16 increases from 1 April 2012 - For more information contact us.
Inland Revenue is a Creditor
The Income Tax Act 2007 has a provision which allows Inland Revenue to collect outstanding tax of a company from another similar company if it considers there was an arrangement to avoid paying tax due.
The company can have similar shareholders or directors and the rule applies to most taxes.
The message is clear, know the law - there are trips and traps for advisers and their clients.
Government are enforcing the law with increased effect. It cannot be assumed that there will be no consequences for actions.
"Phoenix" Companies
There is a provision in the Companies Act which provides that it is an offence for a director of a company liquidated because it was unable to pay its debts to be a director of a new company that carries on business and has the same or similar name to the failed company.
The penalty that can be imposed on a such a director is up to 5 years imprisonment or a fine of up to $200,000.
For more information contact us.