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Law change roundup - 90 day trials, Fair Pay Agreements and the governments tax plan

We’ve got the low down on recent law changes and proposed changes to come  that could affect your business.

90-day trial periods

In a significant development for employers across New Zealand, a notable change has come into effect from 23 December 2023. The extension of 90-day trial periods, once limited to employers with fewer than 20 employees, is now applicable to all employers, irrespective of their size.

The development has been made to provide employers with greater confidence when hiring new employees.

What you need to do: A trial period must be agreed to by the employer and the employee in writing, and in good faith, before the employee starts work, as part of their employment agreement.

The extension of 90-day trials will not affect other aspects of employment relations, such as the requirement to act in good faith, or worker protections regarding pay, conditions, leave, and health and safety.

If you’re hiring people on certain work visas, you will also need to consider any immigration requirements relating to the use of trial periods.

To find out more visit:  Trial periods — Employment New Zealand

Repeal of Fair Pay Agreements legislation

From 20 December 2023 the Fair Pay Agreements (FPA) Act has been repealed. Rights and obligations under other employment legislation still apply. Employers, unions, and employees are encouraged to work together to agree suitable employment terms. 

What you need to do: If your organisation currently holds any personal information collected for the purpose of the Fair Pay Agreement activities, including bargaining, it must now be disposed of in line with the privacy laws. The Office of the Privacy Commissioner explains how you can do this.

Disposing of information and documents safely — Office of the Privacy Commissioner

The Ministry of Business, Innovation and Employment has more information on fair pay agreements.

Fair Pay Agreements legislation — Ministry of Business, Innovation and Employment

Potential changes to tax

The upcoming tax plan, set to take effect from June 2024, has been unveiled by the new government. Here’s a snapshot of the proposed changes.

Increasing Income Tax Thresholds:

The government is considering adjustments to income tax thresholds, providing potential relief for taxpayers.

Expanding Eligibility for Tax Credits:

Proposed changes include increasing eligibility for the Independent Earner Tax Credit (IETC) and the FamilyBoost childcare tax credit. This aims to ease financial pressures for eligible individuals and families.

Enhancing Working for Families Tax Credits:

Working for Families tax credits may see an increase, further addressing financial strains faced by families.

Mortgage Interest Deductibility for Rental Properties:

The reintroduction of mortgage interest deductibility for rental properties is under consideration, impacting property investors.

Changes in Vehicle Fees:

Higher CO2-emitting vehicles are expected to no longer be subject to fees, aligning with environmental goals.

App Tax Reversal:

The proposed reversal of app tax is part of the government's initiative to address specific taxation concerns in the digital space.

Repeal of Foreign Buyers Tax:

The foreign buyers tax is slated for repeal, reflecting ongoing adjustments in New Zealand's economic policies.

Brightline Tax:

Returning the bright-line test to a two-year period from 1 July 2024.

Depreciation Commercial / Industrial Buildings:

Removing depreciation deductions for commercial and industrial buildings from 1 April 2024 (brought back in as part of the covid recovery).

Why These Changes:

These proposed changes are a response to New Zealand's efforts in managing inflation and addressing the cost-of-living crisis. The government aims to alleviate financial strains for Aotearoa, and these tax adjustments play a crucial role in achieving that goal.

What You Need to Do:

While these policies have yet to be passed and do not have immediate implications, staying informed is key. We will keep you updated on any major changes, including updates from the Inland Revenue (IR), that may impact you. Your awareness and understanding of these proposed changes will ensure you are well-prepared for any adjustments in the tax landscape.

Stay Informed, Stay Prepared:

As always, our commitment is to keep you informed and prepared for any changes that may influence your financial situation. If you have any questions or concerns regarding these proposed tax adjustments, feel free to reach out. We are here to assist you in navigating these updates smoothly

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