Payday Filing – An Overview of Changes and Requirements

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The new payday filing legislation announced on March 1st of this year will bring with it several changes and requirements for those who do business in New Zealand. While you should already be aware of many of the important features of these new regulations, there is still some time left to bring yourself up to speed with your obligations as an employer before the mandatory cut-off date.

For employers in New Zealand, the new system will make submitting the required information to the Inland Revenue much easier and more straightforward. However, it’s important that you take some time to fully understand the process and what is required from you to ensure that everything goes as smoothly as possible when April 1st arrives.

Keep reading to learn more about some of the specifics to help bring you up to speed with what you can expect when payday filing becomes mandatory.

Changes To The Submission Process

Previously, employment information could be submitted to Inland Revenue either manually or by uploading data online. This was required once per month which represented a significant delay in getting timely information to the Inland Revenue. Now it is mandatory to submit information each payday, for all businesses, and electronically for any business whose annual PAYE and ESCT deductions are $50,000 or more. If you fall under this limit, you may still file this information by paper. It is important to note this as it is different than the previous threshold which was $100,000.

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This “each payday” requirement will differ depending on the particular pay schedule you provide your staff. For example, those who pay weekly or bi-weekly will be required to file on a weekly and bi-weekly basis, respectively.

The most salient feature of the new legislation is the new submission deadlines. If you are filing electronically, you must submit the information to Inland Revenue within two days of each payday. If you are filing by paper, the deadline is ten working days.

Changes To Submitted Information

From the guidelines published by Inland Revenue, you must file employment information from each payday, rather than with the Employer Monthly Schedule which is no longer required. You must include the details (including addresses and dates of birth) for new and departing employees. Specifically, this “employment information” must include the ESCT for each employee, the pay period start and end dates, the structure of the pay cycle, and the payday date itself. Previously, new employee forms (the IR330 tax code declaration and the KS2 KiwiSaver deduction) needed to be manually filed with Inland Revenue. Now, there is an online form which conveniently combines these two forms which must be submitted as well.

Changes To The PAYE System

There have been no changes made to the dates on which taxes are actually due. This will be once or twice per month depending on the amount of money your business regularly holds. The new requirements fundamentally revolve solely around reporting earnings and PAYE information within two days of each payday. Consequently, it remains optional as to whether employers wish to make actual payments more frequently or not.

Prepare For The Implementation Soon

The deadline for implementation is April 1st, 2019. For those who currently use payroll software to streamline their accounts, the new changes will not represent a major hurdle. It is best to get started and make the adjustment as early as possible to avoid difficulties when the deadline arrives. Businesses may opt-in to the new system at any time before the cut-off, although there is no possibility of “going back” after you have opted in. As such, make sure that your business is organised and ready for the switch before doing so to avoid any potential mishaps with moving to the new system.