Are you ready for the PAYE changes coming into affect on April 1st 2019
The tax system is changing to make it simpler and faster for you to meet your business tax obligations. Improving how you manage your PAYE is an important part of this.
Here is a quick outline of the changes that are coming into effect on 1st April 2019
Improving the administration of PAYE to benefit businesses and employees
Currently, your employees' income information is reported to us monthly. This means the information we have to calculate customers' tax obligations and entitlements they receive from the Government is often out-of-date and doesn't accurately reflect their current financial situation.
In 2018, the Government passed legislation that will save businesses time and make sure we receive more timely and accurate information for calculating customers' tax and entitlements. This aims to give New Zealand families more certainty about what support they're entitled to and what their payment obligations are. Employers and payroll intermediaries will be required to submit employment information every payday instead of monthly. This replaces your:
- Employer monthly schedule (IR348) if you use ir-File, or
- Employer schedule (IR348) if you're a paper filer.
Payday filing – Key points
- Payday filing is voluntary from 1 April 2018 and mandatory from 1 April 2019. Start reviewing how you'll make payday filing part of your payroll processes before this becomes a requirement.
- You'll also be required to request address details for new employees, as well as their date of birth, and then provide that information to us if the employee supplies it.
- If your PAYE/ESCT (employer superannuation contribution tax) is $50,000 or more a year, you'll have to file electronically through software or myIR from 1 April 2019. If it's less than $50,000 a year, you can payday file on paper if you choose, but only from 1 April 2019.
- PAYE payment dates and methods of payment remain the same, but you no longer need to file Employer deductions (IR345) – we’ll use the employment information you file to allocate your payment directly.
- When you begin payday filing, you will no longer file an IR348. You'll begin payday filing from the beginning of the month, because your final IR348 must cover a full month. Until you begin payday filing, continue to file your IR348 as usual.
Increasingly employers are using software to manage their tax filing. Research shows that using technology such as software in business is reducing compliance costs. There are three different options for electronic payday filing – here's how to get started:
- Direct from software (if supported by your software provider). This service lets businesses file their payroll information without having to upload the file in myIR. You don't need to do anything to elect to use payday filing.
Start using either of the following two options by opting in through myIR:
- Upload to myIR in the Payroll returns account (if supported by software provider).
- Onscreen in myIR in the Payroll returns account.
You can opt-in under 'I want to' in the 'My business' section of myIR.If you are filing electronically (either through software or myIR), you have to submit employment information within two working days of paying your staff, or within ten working days from 1 April 2019 if you're a paper filer. There is a twice-monthly filing option for those who submit their employment information on paper.
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