April-May 2018

PAYE Filing Changes – Correction

In our last newsletter we reported that the use of payroll software will become mandatory for filing PAYE returns. Although this was the intention in the original draft of the legislation, it has been changed before it has been passed through parliament.

From 1 April 2019 (and voluntarily before that), returns have to be filed with IRD for each payday. Electronic filing will be mandatory only for employers with total PAYE and ESCT of $50,000 or more. This affects none of our clients.

Payment of deductions and Kiwisaver to IRD remains monthly, on the 20th of the month following the reported payroll period.

For the factsheet see here.

January-March 2018

PAYE Filing Changes

Inland Revenue is changing the rules for how returns for deductions from employee’s pay have to be filed. For the 2019 tax year these changes are voluntary, but will become mandatory the year after.

Essentially, from 1 April 2019 all employers will have to submit information to Inland Revenue within a few days after each pay run, and the use of payroll software with electronic filing capacity will become mandatory.

This is a big change, and expensive for small employers. We believe it will discourage small NFPs and businesses from employing and instead drive people into insecure external contractor situations.

The changes will shift a lot of workload (and expenses) from Inland Revenue to employers, which may be the key reason for the changes. Long-term the government appears to want to shift from our current annual tax assessment to assessing tax purely at the time it is earned. This would be bad news for seasonal workers, including seasonal overtime, casual workers, students, or anyone who is not on a steady income, as it would wipe out end-of-year tax refunds and hurt those on lower tax rates the most.