Change to payday filing made by IRD

By CHRIS GUILLEMOT Partner — Business Advisory Crowe Horwath

From 1 April 2019, it will become compulsory for all employers to adopt payday filing — disclosing their employee pay details on a payday basis instead of filing the current IR345 with the monthly totals.

This also applies to payments made to contractors’ subject to withholding tax. PAYE and Withholding Tax will still be paid on the 20th of the month following (or twice monthly for larger employers).

For employers with more than $50,000 of annual PAYE and Employer Superannuation Contribution Tax (ESCT — tax on Kiwisaver contributions by the employer) it will be compulsory to file electronically and within two working days after the payday.

For smaller employers, you can opt to supply the information twice monthly or on a payday basis. You can supply a paper return within 10 working days after the payday. But the extract below from the IRD website suggests that even if you are a smaller employer, there is no 10-working day rule for contract payments and withholding tax, and the returns must be filed within two working days:

Payday filing for scheduler payments

If you choose to use payday filing you don’t need to provide contractors’ details such as date of birth, start and end dates and contact details if you don’t have them. You can include your schedular payments information when you file your employment information on a payday basis, i.e. when you pay contractors, or on a twice-monthly basis.

Scheduler payments made:

- between the 1st and 15th of the month must be reported to us within two working days after the 15th of the month.

- from the 16th to the end of the month must be reported to us within two working days after the end of the month.

So, with all this tax simplification leading to more information filing to IRD each time a new law is bought in, ask yourself:

Can my systems cope with the changes? Is all my paperwork up to date and compliant?

It is timely before 1 April rolls around to check with your payroll software provider to ensure that, come implementation date, you will be able to file the information within the timeframes thatIRD has introduced.

Given that Inland Revenue is going to have more timely access to your payroll information, it is equally important to ensure your payroll documentation is up to date. Check: Do all employees, permanent and casual, have contracts? Have they signed valid tax code declarations that you hold on file?

Do you have contracts with your subcontractors? Do you hold a copy of their exemption certificate if their payments are being treated that way?

If you are unsure of these or any other payroll issues, the time is now to get things sorted.

■ This information is general in nature and readers should seek specialist advice before making financial decisions.