While this was introduced by the previous National government, it looks like the new government will carry on the process of introducing two major changes affecting anyone who employs staff or anyone who supplies payroll systems and services to the businesses.
The first change is the introduction of "Payday filing of PAYE information"
Employers currently report PAYE information about their employees to Inland Revenue on a monthly basis regardless of how frequently they pay their staff.
Inland Revenue’s systems and processes are being redeveloped to take advantage of modern digital technology. Under the proposed changes, the PAYE information-filing process will be integrated into the payroll software that many employers use to pay employees.
Employers would then file their PAYE information each payday directly from payroll software. Employers above the electronic filing threshold, all payroll intermediaries and employers using payroll software would be required to file their PAYE information by the second working day after payday. The due date for PAYE information from other employers would be seven working days after payday.
Under the proposed changes, employers would be able to file their PAYE information each payday from 1 April 2018 and would be required to do so from 1 April 2019.
These changes have not been passed into legislation but feedback I have had is that this is very likely to happen before the 1st of April 2018
While the requirement to do this does not take effect until 1st April 2019 employers will have the option to do it if they wish. The big question will be whether your current payroll software or payroll service provider has the capability. This is a question all employers should be asking NOW and not on the 31st of March or worse the 31st of March 2019.
This change will require payroll systems to be able to talk directly to the IRD myIR site and to pass the information to the IRD. This will be easier said than done, especially if the payroll system is PC based and not in the cloud.
The alternative, which does not bear thinking about, would be that you would have to manually lodge this information via the myIR site. We are not talking a couple of numbers here. This will involve loading ever employees details, total pay, KiwiSaver, start and finish dates etc. Doing this manually every pay period would be a nightmare. This would be the situation for an employer who doesn't currently use a payroll system ie uses a paper-based system, spreadsheets etc.
So what do you need to do next:
If you are using a PC or cloud-based payroll system you should be talking to your payroll provider now, even if you are not going to lodge PayDay returns voluntarily and are going to wait until April 2019. Don't leave it until the last minute. If they are not ready for April 1st, 2018 then when will they be ready?
This is particularly true if your payroll provider is based overseas where they may not currently have to deal with this sort of reporting.
If you are not confident your payroll software provider will be ready I would recommend looking for a new solution as soon as you can as payroll systems always take a while to bed in.
If you are using a third party to process your pay such as a payroll bureau or accountant you need to be asking the same questions. Is the software they use ready and if not when will it be ready. At the end of the day, you are the employer so you are the one who has to be compliant.If you are using a manual system such as a wage book or spreadsheets now is the time to ask yourself if it is time to start thinking about automating this key part of your business. The benefits of moving to a payroll system or payroll provider are far greater than just the Payday reporting.
The other question to ask is whether this change will have any impact on the fees you currently pay given that the payroll service provider could be having to lodge up to 4 more returns per month than they do now.
If you are not confident your payroll service provider will be ready or if the fees will drastically increase I would recommend looking for a new solution as soon as you can as payroll systems always take a while to bed in. This could include bringing your payroll in-house.
As I have said these changes are coming whether we like it or not. It is just a matter of when not if so now is the time to start thinking about how it will impact your payroll management.
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