Get on the front foot with New Zealand IRD payday filing
Mandatory payday filing hits NZ from April 2019, and chartered accountants can help clients cope with these payroll changes.
- From 1 April 2019, payday filing will be compulsory for all New Zealand employers, integrating payroll and tax obligations.
- On each pay run, employers will send through to Inland Revenue details of PAYE deductions, student loan payments and KiwiSaver contributions.
- Inland Revenue is working closely with software providers on payday filing packages, and is enhancing its myIR portal.
By Gaye Searancke
At Inland Revenue we’re investing a lot of time talking to our people and customers about the big changes we’ve got lined up for 2019.
We are ushering in the biggest change in a generation to simplify tax for individuals and integrate tax into the business process. One of the most common questions we get asked is: “What will this all mean for me?”
It’s a fair question. People in all parts of our tax system want to understand what Inland Revenue’s transformation means in real, practical terms.
A key change for NZ payroll process in 2019
The introduction of mandatory payday filing will be a key change in the year ahead. From 1 April 2019, it will be compulsory for all New Zealand employers to send information to Inland Revenue every time they pay their employees. This information includes PAYE deductions, student loan payments and KiwiSaver contributions. Employers will also have to update us about new and departing employees.
“The rewards of payday filing are worth the effort.”
There are a few ways to answer the “What does it mean for me?” question.
One perspective is that payday filing adds another compliance burden to the life of an employer. To moderate that, it’s worth remembering that this information is already being compiled by employers every pay day. The difference is it will be sent to Inland Revenue straight away rather than putting it aside and then compiling it in a monthly record when the Employer Monthly Schedule is prepared and filed.
Payday filing means that payroll and tax obligations are integrated. We appreciate this means a change to existing business practices and it will take some getting used to. But the compelling reason for doing it is to help individuals get their taxes right more often.
Over time, our new computer system will be able to use all the timely payroll information we receive to better understand the circumstances of our individual customers. The flow-on effects of this will be transformational for the tax system. It will help us prevent more people from falling into difficulty.
For example, fewer taxpayers who receive the Working for Families tax credit will rack up debt from being overpaid. This is because our up-to-date payroll information will allow us to pay the correct entitlement based on their current income.
We’ll also be able to make sure that more customers are on the right tax code. This means that more people will be paying the right amount of tax at the right time – and avoids having to recoup any overpaid tax, or pay more tax, at the end of the year.
That’s the power of having more timely access to payroll information – and we believe New Zealanders will benefit from it.
How CAs can help clients with payday filing
We’re working closely with payroll software providers and making enhancements to our online services portal myIR to make these changes as straightforward as possible. And the solutions we’re seeing from software providers are impressive. There are packages out in the market where information can be sent to Inland Revenue in just a few clicks.
Another common question is, “Can IR make this happen?” Absolutely we can. We are working hand in hand with software providers who are very engaged in this work. We’re doing a lot to make sure all employers are aware of the changes and the options available to them.
As CA ANZ members, you can help us with this. You have trusted relationships with employers and you understand how the change will affect them.
Please take every opportunity to make sure your clients are aware of the changes coming and check with their software provider about when their payday filing solution will be ready. The rewards of payday filing are worth the effort.
Gaye Searancke is the deputy commissioner, customer compliance services – business, at New Zealand’s Inland Revenue.
Find out more at New Zealand Inland Revenue’s “What you need to know about switching to payday filing” page.