Novopay chaos has domino effect
Teachers are set to lose out on child support payments and KiwiSaver contributions because of the ongoing Novopay fiasco.
The chaotic payroll system – which has under or overpaid staff since September – has created a huge headache for Inland Revenue.
Fairfax has learned the tax department has installed a senior manager and small teams of specialist payroll experts at the Ministry of Education to sort out the mess.
With the end of the tax year looming, there are fears the problems could lead to reduced Work for Families payments for affected staff. Student loan repayments and KiwiSaver contributions are also expected to be miscalculated.
Revenue Minister Peter Dunne admitted the debacle is ‘‘quite a nightmare’’ for IRD.
‘‘It’s not yet catastrophic – the major impacts don’t come to the end of the tax year – but it’s certainly a mess, certainly difficult, and it’s going to take quite a lot of effort to resolve it.
‘‘I think we are doing as best we can at the moment, given the situation.’’
The department is also working on a software programme to model deduction patterns for individuals which would highlight discrepancies.
Just over 90,000 people come through the education ministry payroll into IRD, the largest employer in its records. Around a third of them have KiwiSaver deductions.
IRD relies on employers submitting a monthly Employer Monthly Schedule which lists PAYE, child support, student loan and KiwiSaver deductions and employer contributions.
Mr Dunne said there were ‘‘significant’’ impacts for Working for Families payments. Entitlements are determined on the basis of the previous year’s income, with data submitted at the end of the tax year in March and any wrong data will skew payments.
‘‘If their income is over what it should be then their payments will be reduced. Or people could face having to make refunds,’’ Mr Dunne said.
He urged staff who believe they are affected to contact the IRD. Tax officials are working off the assumption that Novopay will remain in place.