While this may fall on April fool’s day, be assured that payday filing is no joke. You seriously have to be ready for payday filing by April 1st 2019 – in a mere two weeks.
In a move aimed at reducing taxation error and marrying payroll with tax obligations in order to create greater accuracy and efficiency, New Zealand has mandated that businesses submit payroll information to the Inland Revenue Department each and every instance a payment is made.
Previous to this legislation, monthly reports were required regardless of how many pay runs or individual employee payments you made. This will now affect all employers in New Zealand, so make sure you are ready.
The IRD state:
From 1 April 2019 employers must:
- File employment information every payday instead of an Employer monthly schedule
- Provide new and departing employees’ address information, as well as their date of birth – if they have provided it to you, and
- File electronically (from payday compatible software or through myIR) if your annual PAYE/ESCT is $50,000 or more.
What is Payday filing?
Payday filing is a new initiative by the NZ Government which changes the way you report payroll information to Inland Revenue (IR). Fundamentally you, as a small business, will need to submit digital reports every pay day, as opposed to every month which is the current requirement.
Under payday filing, employers are required to report employee payments to Inland Revenue (IR) every single time they pay an employee via an approved digital service or application. A reporting system has been created to allow employers to report each pay run electronically in myIR, although reporting simply through your existing accounting software is by far the most preferred and supported method.
Who is affected?
All employers will be affected, although there is a threshold to allow instances of paper filing.
- If you are paying more than $50,000 PAYE and Employer Superannuation Contribution Tax (ESCT) per year, you will be required to file electronically through accounting or payroll software or alternatively via myIR from 1 April 2019.
- For those who pay less than $50, 000 in PAYE and ESCT tax per annum, you may file online, through software, or by paper if necessary (only from 1st April 2019).
What do I need to do?
- If you are using Reckon Hosted, your software will already reflect these changes with inbuilt facilities for Payday Filing with no need for any upgrading or updating.
- If you are not using accounting software, its a great time to embrace a cloud based and payday filing compliant solution.
- While not ideal, if you are not using payroll or accounting software, you will now need to manually upload digital records in myIR, although only from April 1st, not before.
- Payday filing, which was voluntary last year is now compulsory for those with annual payrolls over $50,000. You must now file reports digitally every pay day.
- Be aware that the ir-File service in myIR, previously used to file Employer Monthly Schedules and Employer Deductions forms, has been discontinued. The ‘payroll’ account replaces this, which is available now in the My Business section of myIR.
Chat to your adviser
The best way to get across these changes with confidence is to have a chat to your bookkeeper, accountant or business adviser. Your adviser will no doubt be fully aware of all the pay day changes as this is their bread and butter. They will be fully aware of your individual circumstances and will be in a perfect position to advise you on your next steps with clear and solid direction.
For further information, please consult the IRD website for direct advice from the New Zealand Government.