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If you are a business owner in New Zealand, you should already be aware of the new payday filing legislation that was announced on March 1st of this year. If not, the critical point to be aware of is that payday filing with Inland Revenue will become compulsory for all New Zealand businesses who have employees with PAYE deductions.
Previously, it has only been voluntary to file employee earnings and PAYE information each and every payday, however, this change will be implemented and made mandatory after April 1st, 2019. While the date might seem to be several months down the road, it is best to organize and adjust your business now so that the implementation process is not traumatic.
Let’s take a closer look at some of the most critical points to pay attention to help bring you up to speed with the recent changes and point you in the right direction going forward.
Why The Change?
There are a number of important reasons for the implementation of this new system. With filing each payday, Inland Revenue – and hence the government as a whole – will have more accurate information which will aid in the ability to understand the effects of many social policies.
With the previous system, Inland Revenue could wait up to fifty days to receive payment information from employers, but this has now changed. Of more particular importance to your business, the new system will allow payroll errors to be detected sooner and it will also give your employees greater assurance about their tax obligations and entitlements.
What Should I Do To Get Started?
Those businesses which rely on payroll software will have a much more streamlined experience during this transition and this should be something to consider for those who do not use these programs already. Nevertheless, what you should expect is that you will need to file more information with Inland Revenue more frequently.
If your annual PAYE and ESCT deductions are $50,000 or more, you will also need to file this information online and if your deductions are less, you may file by paper. Depending on the payroll schedule for your particular business, the amount of work required to adjust to these changes will vary.
What Information Must Be Filed?
Based on the outline provided by Inland Revenue, you must file employment information from each payday rather than with the Employer Monthly Schedule and the details, including addresses and dates of birth, for new and departing employees. Again, this must be done electronically, either through onscreen data entry or uploading files from payroll software, if your annual PAYE and ESCT deductions are $50,000 or more.
On the other hand, if they are below this limit, you may file by paper within the specified time. You will have two working days after payday to file this information or ten working days if you are filing by paper. It is also important to know that no changes have been 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.
Prepare For The Changes Early
Although the date is still several months away, New Zealand employers are advised to implement the changes as soon as possible before April 1, 2019. It can take some time to adjust to the new system, to ensure that your business is ready to go by the cut-off date. For business owners who are using payroll software, these changes will be very easy to implement and may not generate much extra work or hassle for your operations.
