From sick leave updates to new investment property rules, IRD has gathered this year’s law changes into one place.
Check out this summary to see what applies to your business
Sick Leave Changes
These are the changes for sick leave
- When: From 24 July 2021
- What: The number of sick leave days employees are entitled to will increase from five to 10. Employees will get the extra five days when they reach their next entitlement date – either after being employed in a job for six months or on their sick leave entitlement anniversary (12 months after they were last entitled to sick leave).Employees who already get 10 or more sick days a year will not be affected by this change.
- Why: To ensure that employees have enough time to recover from sickness or injury, making the workplace healthier and more productive.
- What you need to do: After an employee has been working for you for six months, or when an employee reaches their next entitlement date after 24 July 2021, they will be entitled to an extra five days paid sick leave a year.
- Allow for employees to accumulate up to 20 days of sick leave. This means employees can carry over 10 days of unused sick leave into the next year.
- Ensure that payroll systems have been updated to reflect the increase in sick leave.
- Update employment agreements to align with employee’s new sick leave entitlements where necessary. The new minimum entitlements will apply whether or not an employment agreement is updated, but updating the agreement is best practice.
- Be aware of the changes and communicate with employees.
- Allow employees to use sick leave to care for a sick or injured spouse, partner, dependent child or any other dependent individual.
- Pay a sick employee what they’d get if they’d worked a normal day, including bonuses, overtime, etc.
- Let employees who’ve worked for you for less than six months take sick leave in advance.
- Choose to let employees carry over extra sick leave, beyond the 20 day requirement from year to year.
- Offer more than 10 days sick leave a year.
This also applies to casual workers if, after six months, they have worked an average of at least 10 hours a week and at least one hour a week or 40 hours a month.
Minimum wage increase
These are the changes for the minimum wage increase
When: From 1 April 2021
What: The new minimum wage rates, before tax, are:
- Adult – $20.00 an hour (up from $18.90)
- Starting-out – $16.00 per hour (up from $15.12)
- Training – $16.00 per hour (up from $15.12)
Why: By law, the government must review the minimum wage rates every year.
What you need to do:
- If you do have staff on minimum wage, send them a letter or email to let them know about the increase.
- If any workers are on starting-out or training wages, now is a good time to check when they’ll be eligible to move to the adult rate.
- If you pay staff minimum wages, recalculate your budget for the rest of the year, as you’ll be paying out more in wages. To work out the updated cost of your employees, use the Employee Cost Calculator.
- Check that any affected employment contracts are updated.
- Talk to whoever runs your payroll system to make sure they’re ready for the changes.
Tenancy Law Changes
These are the tenancy Law changes
When: From 11 February 2021
What: Multiple changes to tenancy laws, which include:
- when you can end a tenancy
- rent bidding when you seek new tenants
- responses to tenant’s requests to make changes to your property.
Why: Significant changes have been made to tenancy law, to modernise New Zealand’s rental laws and align them with present-day realities of renting.
What you need to do:
- Landlords and property managers can no longer end a periodic tenancy without reason just by giving 90 days’ notice and will no longer be able to terminate with notice unless certain reasons apply.
- If a tenant wants to make a minor change to your property like installing picture hooks or curtains, you can’t refuse. Tenants must make a written request before making any minor changes and you must get back to them within 21 days. A change is minor if it’s unlikely to damage your property, poses no risk to health and safety, and needs no council consent. It must also be easily removed, so your property can be returned to a substantially similar condition at the end of the tenancy.
- You must now include a price when advertising a rental property.
- You can’t encourage would-be tenants to pay more than this advertised price. For example, if someone really wants to rent your property, you can’t tell them they can beat out other people by paying more than the asking price.
Healthy homes standards
These are the changes to the healthy homes standards
When: From 1 July 2021
What: All boarding houses, except those provided by Kāinga Ora or registered Community Housing Providers, must meet the five healthy homes standards.
A boarding house is when a tenant rents a single room, or a sleeping area within a room they share with other tenants. They also share facilities, for example the kitchen and bathroom. This is different to a standard tenancy, where one or more tenants sign the tenancy agreement to rent the whole property. A boarding house is occupied, or intended to be occupied by at least six tenants. Also, private rentals must meet the five healthy homes standards within 90 days of any new or renewed tenancies that start on 1 July 2021 or after this date.
Why: To improve the quality of New Zealand’s rental homes and improve the health of New Zealanders who rent.
What you need to do:
- Heating standard: Landlords must provide one or more fixed heaters that can directly heat the main living room. The heater(s) must be acceptable types, and must meet the minimum heating capacity required for your main living room.
- Insulation standard: Existing ceiling and underfloor insulations may need to be topped up or replaced.
- Ventilation standard: Rental homes must have openable windows in the living room, dining room, kitchen and bedrooms. Kitchens and bathrooms must have extractor fans.
- Moisture ingress and drainage standard: Rental properties must have efficient drainage for the removal of storm water, surface water and ground water. Rental properties with an enclosed sub-floor space must have a ground moisture barrier.
- Draught stopping standard: Landlords must make sure the property doesn’t have unreasonable gaps or holes in walls, ceilings, windows, skylights, floors and doors which cause noticeable draughts. All unused open fireplaces must be closed off or their chimneys must be blocked to prevent draughts.
- Exemptions to the healthy homes standards: In some situations a property may be exempt from complying with the healthy homes standards of parts of the standards.
Vaping law changes
These are the changes to the Vaping Law
When: From 11 August 2021
What: This relates to display, promotion, advice, age information, packaging, safety requirements, annual reporting and returns, fees and levies. The provisions of the Act are being phased in over 15 months, so some provisions are already in effect and some, like the ones mentioned here, are taking effect further down the track.
Why: The aim of these new regulations is to strike a balance between ensuring vaping products are available for smokers who want to switch to a less harmful alternative and making sure these products aren’t marketed or sold to young people.
What you need to do:
- General retailers can only sell tobacco, mint or menthol flavours of vaping products and smokeless tobacco products.
- Retailers can apply to be approved specialist vape retailers.
- By 11 February 2022, all manufacturers and importers of vaping and tobacco products must notify the Vaping Regulatory Authority about the products they intend to sell in New Zealand. You can start the notification process from 11 August 2021.
- The notification process has to be repeated every 12 months.
For further information on what changes are being made and how this might affect your business, the Ministry of Health has guidance on its website.
Changes to consumer credit laws
These are the changes to the consumer credit laws
When: From 1 October 2021
What: Directors and senior managers of companies that provide consumer credit must now be certified as ‘fit and proper’, to provide this service. This means they’re deemed to be financially sound, honest, reputable, reliable and competent to do the job. There are also new due diligence requirements which means that directors and senior managers need to take reasonable steps to make sure that if a business is providing consumer credit, there are procedures in place to make sure its obligations under the law are being met.
In addition, there are new requirements around:
- what needs to be disclosed and when, in relation to consumer credit contracts
- how a lender must assess suitability and affordability when a borrower is entering into a loan, and
- what information lenders must include in their advertising.
Why: To reduce problem debt and resulting consumer harm.
If you’re a director or senior manager of a company that provides consumer credit you must:
- be certified as ‘fit and proper’
- comply with due diligence duties.
Investment property changes
These are the Investment property Law changes
When: 27 March 2021
What: For properties acquired on or after 27 March 2021:
- Legislation has passed that extends the bright-line test from five years to 10 years on residential property.
- The Government intends for the bright-line test to remain at five years for new builds and will be consulting on what a new build is soon.
- Legislation has passed that introduced a ‘change of use’ rule. If the sale of your property is subject to the bright-line test, and you don’t use the property as your main home for 12 months or more, you will be required to pay income tax on a proportion of the profit made through the property increasing in value.
- If you sell a property within 10 years of acquiring it (or five years for a new build) and it was your main home for the entire time you owned it, you will not pay tax under the bright-line test on any gain in value.
- Any gain in property value that is considered taxable income (including under any of the bright-line tests) will also affect any other obligations or entitlements you have based on taxable income, such as student loan repayments, child support payments, and Working for Families.
For properties acquired before 27 March 2021:
- The previous bright-line test for five years will continue to apply for properties acquired before 27 March 2021.
- The Government has proposed that interest on loans for investment properties acquired before 27 March 2021 can still be claimed as an expense, but the amount will reduce each year until it’s completely phased out by the 2025-2026 tax year. A consultation will be held about this.
Why: These changes have been put forward with the aim of increasing housing supply and housing affordability