How the numbers work: leave and pay entitlements

The apportionment formula

1. Deductible portion = income-earning days divided by (income-earning days plus private-use days)

The empty days are left out of both the top and the bottom of the fraction

A quick worked split

1. Income-earning days: 45
2. Private-use days: 30
3. Deductible share: 45 divided by (45 + 30) = 45 / 75 = 60%
4. Deductible whole-property costs: $20,000 × 60% = $12,000

The other $8,000 of whole-property cost is not deductible

🔢 Four worked New Zealand examples

1. Private use: yes (30 days). Income-earning use: yes (40 days). Empty: 295 days, which is 62 or more

All three tests met, so the mixed-use rules apply

Who this happens to, and what it meant for them

🔢 Four worked New Zealand examples

1. Deductible share: 40 divided by (40 + 30) = 40 / 70 = 57.14%
2. Deductible whole-property costs: $16,000 × 57.14% = $9,143
3. Rent-only costs (fully deductible): $2,000

Total deductions: $9,143 + $2,000 = $11,143

🔢 Four worked New Zealand examples

1. Income: $12,000
2. Deductions: $11,143

Taxable rental income: $12,000 - $11,143 = $857

🔢 Four worked New Zealand examples

1. It is a mixed-use asset: private use, income use, and empty 62 or more days
2. Gross income from renting: $3,200
3. The opt-out applies when that income is under $4,000

$3,200 is under $4,000, so Rangi can leave the crib off his return entirely

Who this happens to, and what it meant for them

1. GST inside a $50,000 cost: $50,000 × 3 / 23 = $6,522

Registering could claim about $6,522 back on the renovation

Who this happens to, and what it meant for them

1. Registering brings the bach into the GST net
2. If they later sell for $900,000, GST on the sale: $900,000 × 3 / 23 = $117,391

The GST on sale ($117,391) dwarfs the $6,522 they claimed

1. Own private use: 50 days
2. Family at mates' rates (below 80% of market): 30 days, counted as private use
3. Public at market rate: 25 days, the only income-earning days

Private-use days: 50 + 30 = 80. Income-earning days: 25

Who this happens to, and what it meant for them

1. Income of $5,500 is over $4,000, so they must return the property
2. Deductible share: 25 divided by (25 + 80) = 25 / 105 = 23.81%
3. Deductible whole-property costs: $18,000 × 23.81% = $4,286

Only $4,286 of the $18,000 is deductible

🔢 Worked examples

1. Without an IRD number (45% no-notification rate):
2. Tax deducted: $1,200 × 45% = $540
3. Once she gives her IRD number and an M code:
4. On $1,200 a week (about $62,400 a year), weekly PAYE is roughly $210
5. ACC earners levy: $1,200 × 1.75% = $21 (deducted either way)

Take-home on the correct code: $1,200 − $210 − $21 = $969

Who this happens to, and what it meant for them

🔢 Worked examples

1. PAYE on $32,000:
2. First $15,600 @ 10.5% = $1,638
3. Next $16,400 @ 17.5% = $2,870
4. Total PAYE: $4,508
5. ACC earners levy:
6. $32,000 × 1.75% = $560

Total deductions: $5,068. Net income: $32,000 − $5,068 = $26,932

Who this happens to, and what it meant for them

🔢 Worked examples

1. Effective tax rate (PAYE only): $4,508 ÷ $32,000 = 14.1%

1. PAYE deducted (based on a $72,000 annual rate):
2. Annual PAYE on $72,000 would be $13,820, so about $1,152 a month
3. Over 4 months: 4 × $1,152 = $4,607 deducted
4. Correct tax on her actual $24,000:
5. First $15,600 @ 10.5% = $1,638
6. Next $8,400 @ 17.5% = $1,470
7. Correct PAYE: $3,108

Refund due: $4,607 − $3,108 = $1,499

Who this happens to, and what it meant for them

1. Main job, $35,000 (M code):
2. First $15,600 @ 10.5% = $1,638
3. Next $19,400 @ 17.5% = $3,395
4. PAYE: $5,033
5. Second job, $12,000 (S code, 17.5%):
6. $12,000 × 17.5% = $2,100

Combined PAYE: $5,033 + $2,100 = $7,133

Who this happens to, and what it meant for them

1. Check against one job on the M code:
2. First $15,600 @ 10.5% = $1,638
3. Next $31,400 @ 17.5% = $5,495
4. Correct PAYE on $47,000: $7,133

The S code gives exactly the right result, so no square-up is needed

🔢 Four New Zealand examples

1. Old weekly gross pay: $68,000 divided by 52 = $1,307.69
2. Notice paid by new employer: 1 week = about $1,307 gross
3. Redundancy pay: $0, because the law does not require it and her new agreement had no redundancy clause
4. Unjustified-dismissal grievance: not available, the trial was valid

After one week of notice pay, Priya has no income until she finds new work or a benefit starts

Who this happens to, and what it meant for them

🔢 Four New Zealand examples

1. Trial requirement: the agreement must be signed before the first day of work
2. Tane signed two days after starting, so the trial is invalid
3. Because the trial is invalid, his normal rights apply

Tane can raise a personal grievance for unjustified dismissal, just as any other employee could

Who this happens to, and what it meant for them

1. Wages for hours worked: 6 weeks at $1,000 = $6,000 gross
2. Notice: 1 week paid = $1,000 gross
3. Holiday pay under the Holidays Act 2003: 8% of gross earnings
4. Holiday pay on $6,000: $6,000 times 0.08 = $480

Even under a valid trial, Mele must be paid every hour she worked plus $480 holiday pay

Who this happens to, and what it meant for them

1. Unjustified-dismissal grievance: blocked by the valid trial
2. Discrimination grievance: not blocked by the trial
3. Timing and messages suggest the dismissal followed his disclosure

Sam can raise a personal grievance for discrimination, which a trial does not remove

Who this happens to, and what it meant for them

🔢 Four New Zealand examples

1. Trial rule: the agreement must be signed before the first day of work
2. Aroha started on Monday and signed on Wednesday, so she signed after starting
3. Because she signed after starting, the trial is invalid
4. Her weekly gross pay: $58,000 divided by 52 = $1,115.38

The trial cannot be relied on, so Aroha can raise a personal grievance for unjustified dismissal like any other employee

Who this happens to, and what it meant for them

🔢 Four New Zealand examples

1. A restraint is only enforceable so far as it is reasonable to protect a genuine business interest
2. Reasonableness is judged on how long it lasts, how wide the area is, and how much it limits earning a living
3. A whole-of-country ban for 12 months would stop Daniel earning his $55,000 salary anywhere, which looks far wider than needed

A court could reduce this restraint, for example to a few months within a small radius of the salon, or strike it out, but Daniel should negotiate it down before signing rather than gamble on that

Who this happens to, and what it meant for them

1. Weekly gross pay: 30 hours times $24.50 = $735
2. Proposed deduction: $80 for the till shortage
3. Under the Wages Protection Act 1983, deductions need to be required by law or have your written consent
4. Even with a general deductions clause, the employer must consult Mere before making this specific deduction and cannot deduct an unreasonable amount

The employer cannot simply take the $80 on the strength of a blanket clause. Mere is entitled to be consulted first, and the deduction must be fair and reasonable

Who this happens to, and what it meant for them

1. Offer A weekly pay: $62,000 divided by 52 = $1,192.31
2. Offer A notice cushion: 4 weeks times $1,192.31 = $4,769.23
3. Offer B weekly pay: $64,000 divided by 52 = $1,230.77
4. Offer B notice cushion: 1 week times $1,230.77 = $1,230.77
5. Offer B availability clause: pays no compensation for being on call, so it is not a lawful availability provision

Offer B pays $2,000 more a year, but gives $3,538.46 less notice cushion and includes an availability clause that does not meet the legal test. Sina should ask Offer B to fix the notice and the availability terms before choosing on pay alone

Who this happens to, and what it meant for them

What the split is worth

1. All $30,000.00 allocated to lost wages: tax of $9,900.00, leaving $20,100.00 .
2. Split as $10,000.00 lost wages and $20,000.00 under s123(1)(c)(i): tax of $3,300.00, leaving $26,700.00 .

The same headline settlement, $6,600.00 apart in the hand.

The record of settlement

1. The split, itemised. Each head of payment separately, with its own figure.
2. Gross or net. Stated plainly for every figure.
3. When it is paid. A date, not a period.
4. Confidentiality and non-disparagement. Note who they bind and what they cost you.
5. An agreed reference , attached rather than promised.

Signed and certified by a mediator, it is generally full and final.

Before you sign anything

1. Get the split itemised and make sure it reflects what actually happened.
2. Confirm gross or net for each figure in writing.
3. Check the reference is attached in its final wording.
4. Understand what you are giving up , because full and final means exactly that.

Free mediation is available, and unions and Community Law help at no cost.

Accrual in Practice

1. You start a job and begin continuous employment
2. Leave builds through the year toward your entitlement
3. At twelve months, the minimum annual leave entitlement becomes available
4. It then builds again toward the next anniversary

Leave When You Resign or Are Let Go

1. Your job ends, by resignation, redundancy, or dismissal
2. Untaken annual leave is calculated and paid in your final pay
3. Any leave taken in advance may be deducted
4. Check the final figure against what you expected

What it pays

1. Salary $85,000, nine completed years: $85,000 / 4 = $21,250.00
2. Salary $85,000, more than ten years: $85,000 / 2 = $42,500.00
3. Difference the ten year step makes before tax: $42,500.00 - $21,250.00 = $21,250.00
4. Four weeks' notice paid in lieu, if negotiated: $85,000 / 13 = $6,538.46

Someone nine and a half years in who volunteers now gives up about $21,250 before tax that six months' more service would bring, if the role would have lasted that long.

The numbers to run first

1. Average weekly income before tax over 26 weeks, including the redundancy payment: $1,635
2. Threshold for a single person with no children: $1,620.67, so the stand-down is 2 weeks
3. Weeks with no income, including the arrears week: 2 + 1 = 3
4. Essential spend: $650 a week, so the gap costs $650 x 3 = $1,950.00
5. Net redundancy payment of $9,750: runway at $650 a week is $9,750 / $650 = 15 weeks before the gap is taken off

A volunteer on these figures has about twelve weeks of runway after the gap, and the first benefit payment lands about three weeks after the last day.

How It Is Decided

1. Would you have worked this day if it were not a public holiday?
2. Yes: it is an otherwise working day, full protections apply
3. No: limited rules apply, you only get extra if you actually work
4. Unclear rosters: look at the genuine pattern of work

Worked through, and the round in numbers

1. Salary $85,000, nine completed years: $85,000 / 4 = $21,250.00
2. Total for the rate: $85,000 + $21,250.00 = $106,250.00, in the 33 percent row
3. PAYE: $21,250.00 x 33% = $7,012.50
4. Net at nine years: $21,250.00 - $7,012.50 = $14,237.50
5. Salary $85,000, ten completed years: $85,000 / 2 = $42,500.00
6. Total for the rate: $85,000 + $42,500.00 = $127,500.00, still in the 33 percent row
7. PAYE: $42,500.00 x 33% = $14,025.00
8. Net at ten years: $42,500.00 - $14,025.00 = $28,475.00

The ten year step is worth $14,237.50 after tax on an $85,000 salary, which is why the voluntary redundancy guide in this series treats service near the threshold as the first question.

Money on a temporary visa

1. Redundancy pay after tax: $12,000
2. Weekly essential spend: $900
3. Weeks the payment covers: $12,000 / $900 = 13.3 weeks
4. Weeks a new employer's accreditation and job check might take before a Job Change application can even be lodged: unknown, so plan for the whole 13 weeks to be spent on the search

On a temporary visa the redundancy payment is the runway, so the search starts the day the notice is confirmed.

Money: the final pay and the tax on it

1. Salary: $75,000, paid steadily, so annualised pay is $75,000
2. Redundancy payment: $15,000
3. Total for the rate: $75,000 + $15,000 = $90,000, which sits in the 33 percent row
4. PAYE on the payment: $15,000 x 33% = $4,950
5. Net redundancy payment: $15,000 - $4,950 = $10,050

The payment on the letter is $15,000; the payment in the account is $10,050, before any student loan deduction.

What it pays, and for how long

1. After-tax redundancy payment: $12,000
2. Average weekly income, net of tax, for the six weeks before the redundancy: $1,000
3. Weeks the payment could replace income: $12,000 / $1,000 = 12
4. AIA waiting period is the greater of 4 weeks and 12 weeks, capped at 13: 12 weeks
5. First payment one month after the waiting period ends: about 16 weeks after the last day
6. Maximum paid at a $3,000 monthly sum assured over six months: $3,000 x 6 = $18,000

On these figures the first cheque arrives about four months after the last day, and the most the policy can ever pay is $18,000.

How to ask

1. Salary: $85,000
2. Two extra weeks on the exit date: $85,000 / 26 = $3,269.23 before tax
3. Four weeks' notice paid in lieu instead of worked, as cash: $85,000 / 13 = $6,538.46 before tax
4. Unspent outplacement budget offered as a retraining allowance: worth whatever the course costs

Three items the formula does not cover, worth about $9,800 before tax plus the course, and none of them moves the formula.

The rate

1. Salary plus employer KiwiSaver at 3.5 percent: $85,000 x 1.035 = $87,975.00
2. Weeks not billable: 4 weeks' leave, plus 12 public holidays and 5 sick days as 3.4 weeks: 4 + 3.4 = 7.4
3. Billable weeks: 52 - 7.4 = 44.6
4. Billable hours at 40 a week: 44.6 x 40 = 1,784
5. Rate to match the salary with no gaps: $87,975.00 / 1,784 = $49.31 an hour
6. With a 20 percent gap between contracts: $49.31 / 0.8 = $61.64 an hour
7. Day rate at 8 hours: $61.64 x 8 = $493.12

An offer of $50 an hour to do the old job as a contractor matches the old salary only if there is never a week without work. About $62 an hour, before the contractor's own ACC levies and expenses, is where the two are level.

Qualifying and Top-Ups

1. You work for the qualifying period of continuous employment
2. You then receive the minimum sick leave entitlement
3. A new allocation is added at each set interval after that
4. Unused sick leave carries over, up to a legal maximum