While most employers now use payroll software, there are still some businesses keeping manual wage records. Modern payroll software is simple, reduces time and errors, and takes care of laborious and complex payroll calculations.
IRD introduced “Payday Filing” in April 2018 and will make it mandatory from April 2019. If you are an employer, using either payroll software or manual wage records, then Payday Filing will impact you.
Since 1 April 2018, employers have been able to opt in file payroll information with IRD each payday. But from 1 April 2019, employers will be required to file payroll information every payday.
As the name suggests payday filing means submitting PAYE returns to IRD after each pay rather than once or twice a month. The due date for paying PAYE and other deductions to IRD won’t change (at this stage anyway).
The IRD’s systems and processes are undergoing redevelopment as part of its Making Tax Simpler initiative, to “take advantage of modern technology”.
IRD’s new software system will collect tax filing information direct from online payroll systems. This means that PAYE filing can now be fully automated.
Who will be affected?
Larger Employers (paying more than $50,000 PAYE and ESCT per year) will need to file payroll information within two working days after each payday.
Smaller Employers (total PAYE/ESCT of less than $50,000 for the previous year ended 31 March 2018) can either:
- file online (direct from your payroll software or by file upload in myIR), or
- continue to file by paper each payday after April 2019
Smaller employers will need to file the information within ten working days after the payday, or 15th and end of the month if you choose to file twice a month. Employers with paper records cannot opt into Payday Filing prior to April 2019 (after which it is mandatory).
What are the benefits?
Employees’ PAYE information can be filed automatically to IRD by your payroll software as part of your normal payroll cycle, saving time by avoiding a separate process at the end of the month.
You will still need to pay the deductions to IRD by 20th of the month following (or twice a month for larger employers) as a separate process.
IRD will have Real Time Data
Payday Filing will ensure IRD have the most up-to-date information at hand to work out tax and other entitlements more accurately (such as child support, student loans, kiwisaver etc). This should improve their service and response times.
Push to use Payroll Software
Payday Filing encourages the use of modern payroll software. This is positive as manual pay records are inefficient and often inaccurate.
What you need to do?
- As an employer you’ll need to register with myIR, if you haven’t already. Once registered go to your myIR account and opt in under ‘I want to’ in the ‘My business’ section of myIR; or
- If you can file direct from payroll software, you don’t need to contact IR to start payday filing. Just ask your software provider to make your first submission through your payroll software and you’ll have begun payday filing.
Q2 helps business owners become more efficient and can assist the transition to Payday Filing and/or payroll software. We recommend transitioning in January or February 2019 to avoid the 31 March 2019 deadline.
Q2 will be running a free Payday Filing workshop in early February 2019. Email email@example.com to register your interest.