Business and Tax Updates March 2025: IBBZ Accounting

Summary:

As the March year-end approaches, now is a crucial time to finalise your financial records and ensure all documentation is up to date. It's also the perfect opportunity to prepare for the year ahead by gathering new information, reviewing tax positions, and aligning your financial strategies with your goals.

At IBBZ Accounting, we are committed to supporting you through this important period with expert guidance and customised solutions to meet your personal or business needs.

Thank you for continuing to place your trust in us. Let’s work together to close out the current financial year with confidence and enter the new one with renewed momentum.

Key Business Updates

1. Minimum Wage Increase

From 1 April 2025, the adult minimum wage will rise from $23.15 to $23.50 per hour, and the starting-out and training minimum wage will increase from $18.52 to $18.80 per hour. This is a timely reminder to review your payroll systems, employment agreements, and budget forecasts to ensure your business is ready for the change. Whether you manage payroll manually or through software, it is important to confirm that wage rates will update correctly. Employers should also check if any employees currently on starting-out or training wages are due to transition to the adult rate. Take this opportunity to review and update employment contracts, ensuring they meet legal requirements and reflect any agreed terms. Finally, it is important to factor in the increased wage costs when preparing your financial forecasts to help manage the impact on your cash flow and holiday pay obligations. If you have not already done so, now is the time to consult with your accountant, payroll provider, or HR team to ensure a smooth transition.

2. Important Reminder for Incorporated Societies – Time to Reregister

The Incorporated Societies Act 2022 is now in force, introducing updated rules for how societies must operate. If your society was registered before 5 October 2023, you need to reregister under the new Act before 5 April 2026 to continue operating.
Reregistration involves updating your society’s constitution, ensuring you have proper dispute resolution processes, confirming you have at least 10 members, and providing updated contact details.

If your society does not reregister by the deadline, it will cease to exist as an incorporated society. This means losing your society’s name, and members could become personally liable for debts. If you wish to continue operating after removal, you will need to apply for a new IRD number and arrange for any GST or employer registrations to be transferred. You will also need to reapply for income tax exemptions or not-for-profit deductions under the new IRD number.

Important Tax Changes

1. IRD Support Available for Taranaki Farmers and Growers Affected by Drought

If you are a farmer or grower in the Taranaki region, you may be eligible for financial support following the recent declaration of a medium-scale adverse event due to ongoing drought conditions. This declaration, made on 27 February 2025, allows affected farmers and growers to access special provisions under the Income Equalisation Scheme, including the ability to make late deposits for the 2024 income year until 30 June 2025, and to apply for early withdrawals if deposits were made before the official declaration date.

As your accountants, we are here to assist you in navigating these options and ensuring your applications are correctly prepared and submitted. If you are experiencing financial hardship or difficulty meeting tax payments, we can also help you apply for a late payment arrangement with Inland Revenue. Please reach out to us if you would like to discuss your eligibility for these support measures or if you need assistance managing your cash flow and tax obligations during this challenging period.

2. Proposed changes to GST on listed services 

Parliament us set to update GST rules for ride-sharing, food delivery, and short-term accommodation services through online marketplaces. Key changes include:

• Flat-Rate Credits: Marketplaces can only claim credits if they record seller details (name, IRD number, GST status).

• GST Timing for Accommodation: Businesses can choose when to account for GST, but no later than 7 days after check-out.

• Taxable Supply Info: Marketplaces must provide GST details to sellers within 28 days unless sellers opt out.

• Opting Out: Accommodation providers earning over $500,000 per year can notify their listing intermediary instead of the marketplace.

• Flat-Rate Credits & Tax: Non-GST-registered sellers can include credits as income and claim GST-inclusive expenses.

For detailed filing requirements and how these changes may impact your obligations, visit our website: GST Change for Suppliers Using Online Marketplaces. 

2. ACC Earners' Levy Rates Set for 2025-28

The ACC earners’ levies have been confirmed for the next three tax years, with a steady increase each year. The levy, charged as a percentage of earnings, will rise as follows:

• 2024-25: $1.60 per $100 (1.60%) 

• 2025-26: $1.67 per $100 (1.67%)

• 2026-27: $1.75 per $100 (1.75%)

• 2027-28: $1.83 per $100 (1.83%) 

4. Upcoming FIF Changes

The New Zealand government is introducing a new taxation method for foreign investments under the Foreign Investment Fund (FIF) regime, effective 1 April 2025. The "revenue account method" will allow new migrants and returning Kiwis to be taxed on actual income and 70% of realized capital gains, rather than on an arbitrary opening value. This change provides a fairer approach, ensuring investors are taxed only when they receive dividends or sell assets for a profit, rather than paying tax on unrealized gains while ignoring potential losses. The reform is expected to be included in a tax bill later in 2025, with more details to follow.