Employees to save 17% on ACC levies from 1 April 2014

The Government agreed to ACC's recommendations for a substantial reduction in the Earners' levy and Work levy, to take effect from the beginning of the financial year on 1 April 2014.

In New Zealand all employees and motor vehicle users are required to pay ACC levies to cover the costs of injuries that happen outside the workplace. Work related injuries are also covered by ACC and are funded by a workplace levy that is paid by employers and self-employed people.

According to ACC Minister Judith Collins, “Workers and employers will be paying less thanks to the (Accident Compensation) Corporation’s astute financial management, outstanding investment performance and dedication to effective rehabilitation."

"The average New Zealand household can expect to keep just over $200 each year. Small businesses will also be around $180 better off annually and larger employers will receive, on average, a $6000 reduction.”

New Earners' levy rates starting from the 1 April 2014 tax year are $1.45 (incl. GST) per $100 of liable earnings. Liable earnings are capped at $116,089 per year.

Calculate your net take-home pay with the tax calculator.

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How to get a pay rise - a few simple steps

In order to ensure success it's important to do some research and to prepare your case for a pay rise in advance. The more prepared you are, the more likely you are to come out of a pay review meeting feeling a lot happier.

Here's a simple guide at to improve your chances of getting a well-earned pay rise.

Before you start:

Know what you're worth in the market

  • check market rates for your skills, education and experience in your city
  • is your industry and job function currently in demand?
  • realistically, are you an above average performer?

Know what your role is worth to the company

Regardless of how smart you are and what your potential is, there is limit on how much the company can pay for any particular role. Maybe you've got a good degree and think you'd be a great manager - that's not going to matter if you're currently employeed as an analyst. You can't expect a manager's pay packet until you're promoted into an actual managerial role. Your best bet here is to aim for promotion by actively taking initiative and consistently taking on more responsibility than what your current role demands.

Align your goals with those of the company

  • ensure your goals are aligned with those of the company, at least over the medium term
  • your boss needs to feel that you're going to stick around, be happy, and continue contributing well to the growth of the company

Have leverage!

It really helps if your company needs you to stay

  • build unique product knowledge
  • build excellent customer relationships
  • be inspirational and innovative

Of course having another job offer can help, though this can backfire at times as it may seem that you're not very committed.

Have the support of high-level managers and colleagues

  • network well - make sure your boss's boss knows about you
  • make your boss look good - that way they're more likely to talk positively about you to other managers

Choose your timing carefully

  • you've got a better chance of getting a pay rise after having a string of wins on the job (+ make sure your boss knows about them)
  • choose a time when the company is on a roll
  • avoid pushing for a pay rise after the company has lost a key contract, or just before big employee holiday expenses

Build a case for a pay rise:

Document your successes

  • do you consistently complete tasks ahead of schedule? Prove it!
  • is your work always of a high quality? Prove it!
  • do you go beyond the call of duty, putting in extra hours to ensure success? Prove it!
  • have you saved the company money? Prove it!

Gather endorsements

  • ask for endorsements from business partners and colleagues

Having written endorsements of your professional work ethic and accomplishments gives your boss some ammunition when justifying your proposed salary increase to upper management.

Establish what salary to aim for

  • be clear in your mind about what amount of pay rise is reasonable
  • don't ask for too much, else you'll come across as greedy, arrogant or out of touch with reality
  • but, don't undersell yourself either
  • be prepared to negotiate a little
  • try the salaries income calculator to work out what your cash-in-hand would be for a variety of different salaries

Go for it!

Schedule a pay review meeting

  • chose the right time to approach your boss - it's best if she's in a good mood and not overwhelmed with work
  • ask for some time within the next couple of days to discuss your future in the company. Don't expect your boss to drop everything and give you a pay review right that minute (be prepared, just in case!), but don't let your boss push back more than a week away.

Present yourself well during the meeting

  • be positive, tidy, and responsive
  • start with some small talk (not too much) and reinforce how much you enjoy working at the company, with all of the opportunities and challenges that it offers
  • mention some of your achievements and show that you're keen to do even more

Ask for the raise

  • let your boss respond, even if there's a big pause
  • your boss may need to "check with upper management", but try to get his or her support during the meeting and put a timeline on getting an answer

Express your thanks

Whatever happens, thank your boss for listening to you, and leave the meeting with a positive attitude

Make your own luck!

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Minimum wage rises to $13.50/hour on 1 April 2012

New Zealand's minimum wage increases 3.85% to $13.50 per hour from the 1st of April 2012.

That's an extra $17.93 per week cash-in-hand for someone working a standard 40 hour week (with no Kiwisaver or Student Loan, and after the ACC earners' levy reductions that also come into effect on 1 April)

$13.50 per hour equates to $540 per week gross, or $28,080 per year.

After tax that comes to $455.17 per week net, compared to $439.01 per week prior to April's changes - a 4.1% increase in net pay (from the combination of increase minimum wage and reduced ACC contributions).

Calculate your own take-home pay here with our salary tax calculator.

Left-leaning political parties have been calling for a rise in the minimum wage to $15/hour, with some members calling April's 50c increase "stingy" and "stuck in the '80s", however with the strong Kiwi dollar NZ's minimum wage currently compares favourably with that of many other countries.

The Government's minimum wage objective is:

"to set a wage floor that balances the protection of the lowest paid with employment impacts, in the context of current and forecast labour market and economic conditions, and social impacts".
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ACC earners' levy reduces to 1.7% on 1 April 2012

NZ Salary and wage earners will receive more net pay from the 1st of April as the ACC earners' levy drops to 1.70% from 2.04%.

What is ACC earners' levy? Find out here.

ACC Earners' Levy Rates

Period Levy Rate Max Earnings Subject To Earners' Levy Maximum Levy Payable
(New) 01/04/2012 - 31/03/2013 1.70% $113,768 $1,934
(Old) 01/04/2011 - 31/03/2012 2.04% $111,669 $2,278

For example, someone earning a salary of $70,000 per year will see their ACC premium drop from $1,428.00 to $1,190.00 - a saving of $4.58 per week.

A professional on $120,000 per annum would see their ACC levies drop from $2,278.05to $1,934.06

Why is ACC Earners' Levy being reduced?

According to the ACC Levy Consultation FAQ:

In the past year we've seen improvements in the variables that impact claim costs, such as claims numbers, the average cost of entitlements and rehabilitation, and we've also seen good growth in our assets.

Tax changes set to hit KiwiSaver on 1 April 2012

Changes to the employer superannuation contribution tax (ESCT) exemption will come into effect on 1 April 2012. The ESCT exemption changes affect all employer superannuation schemes, including KiwiSaver.

From the start of April the 2% exemption from ESCT will be removed which means, if your employer contributes to KiwiSaver or another superannuation scheme, that those contributions will become liable for ESCT.

What does this really mean for Kiwisavers?

Your employer will continue to make the same minimum contributions to KiwiSaver as they used to make, but from 1 April 2012 you'll receive less cash in your KiwiSaver account because your employers' contributions will be subject to tax.

ESCT will be taxed at the following rates:

ESCT ThresholdESCT rate
up to $16,80010.5%
$16,801 - $57,60017.5%
$57,601 - $84,00030%
$84,001 and over33%


For a salary of $50,000/annum the 17.5% ESCT rate will apply:

$50,000 x 2% = $1,000 gross employer contributions

$1,000 x 17.5% = $175 ESCT tax deducted

$1,000 - $175 = $825 net employer contributions will be paid into the employee's KiwiSaver fund per year (= $68.75 per month)

Why are the changes being made?

It's always frustrating to lose more of your salary to taxes. Here's what the Government says as to why these changes have been made:

Removing the tax-free status of employer contributions will make the scheme fairer - currently 50 per cent of this benefit goes to the top 15 per cent of income earners, due to their higher marginal tax rate.
The changes will help the Government return to surplus sooner. The Savings Working Group said achieving this and reducing Government borrowing was the one of the most important things the Government could do to lift national savings.

It's not all bad

On 1 April 2013, one year after these ESCT exemption changes come into effect, the compulsory minimum employer contribution rate will increase from 2% to 3% of an employee's salary. This will act to offset the reduced net employer contributions that will result from the removal of the ESCT exemption. I.e. one year down the track you'll start to receive higher employer contributions into your KiwiSaver account.

Employers and Employees should feel free to contact IRD for any queries about these changes.

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Average earnings increase more than 2% over the year to December 2011

QES figures released by Statistics New Zealand in February show an increase in average weekly earnings of 0.4% over the three months to December 2011. This comes on the back of a 0.6% gain in the prior three months for a year-on-year increase of 2.6% to December 2011

Average weekly earnings were up to $1,016.95, with the private sector averaging $942.70 per week and the public sector averaging $1,280.95 per week.

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Salaries nudge up just 1.3% over the year to September 2010

Average earnings continue to increase slowly after stalling earlier in the year, however the year-on-year increase is the slowest for over 15 years.

NZ average hourly earnings to September 2010

Statistics New Zealand's Quarterly Employment Survey shows a slight increase in total average weekly earnings (including overtime and benefits) over the last three months, making a yearly gain of just 1.3% - the lowest annual increase in average total hourly earnings since the June 1994 year.

Average weekly earnings were up to $972.69 from $965.28 three months earlier.

Salaries are likely to struggle to keep up with inflation over the next reporting period as GST increased to 15% in October, however income tax cuts which also came into effect in October give all workers a boost in take-home pay to compensate.

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Salaries edge up in June - back to September 2009 levels

Average pay in the quarter to June 2010 is still about the same as it was nine months earlier. However there has been a slight up-tick in earnings since the March 2010 quarter, and average earnings are just over 2% higher than during the same period last year.
NZ average hourly earnings to June 2010

Total average weekly earnings(*) according to the Quarterly Employment Survey (QES) were $965.28 as of June 2010. Average earnings for men were $1063.08 per week, and for women $858.85 per week.

*Total earnings include overtime and benefits

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