A New Zealand government requirement that changes the way businesses must submit employee payroll information to the Inland Revenue Department (IRD).

Introduction

At Datacom we work with New Zealand authorities, such as the Inland Revenue Department (IRD) to ensure we develop market leading payroll products that are regularly updated to accommodate legislation changes, in particular changes to social policy. There have been a number of changes over time to Government’s social policy programmes, including for example Child support, KiwiSaver contributions and family tax credits. As these social policies are introduced, new processing rules for business are applied and business must ensure they action.

For business today, no matter what size, the cost and time required to manage software patches or fixes, upgrades and new technologies is costly. Your internal employee changes and the complexities around entitlements and compliance can be timely and stressful to manage.

If you don’t use a robust and world class software payroll product like DataPay, then you run the risk of adding more cost and resources to ensure your organisation is always compliant with any mandated changes.

Payroll software and the business benefits

Cloud hosted technology has changed the way business can operate:

  • It provides access to information at any time with no worries about upgrades, purchasing new hardware, or worrying about whether your payroll product is compliant with all legislation.
  • Setting up employee information from the outset, making amends at any time and then reporting to the authorities without incurring any penalties.
  • Reduces risk.

This quick reference guide will help you understand the new Payday filing requirement.

Payday filing

For all companies in New Zealand the way in which you report your employee tax, social deductions and superannuation information to Inland Revenue will change and be compulsory from the 1st April, 2019 with the introduction of what IRD is calling Payday Filing. This information, as the name suggests will be reported every time your employees are paid as opposed to once a month, which is currently the case.

Datacom has worked closely with the IRD over the last year to define and understand the requirements for payday filing in order to ensure there is a clear and simple process for our customers. New Zealand employers paying more than $50,000 PAYE and Employer Superannuation Contribution Tax (ESCT) per year have the option to switch to an electronic payday reporting system.

What is payday filing?

Employers currently file employee earnings and PAYE information to Inland Revenue each month, through the Employer Monthly Schedule (IR348), no matter how frequently they pay their employees. From April 1, 2019, employers must send employment information every pay day, so every time your employees are paid.

This brings New Zealand in line with the UK and Australia and streamlines the whole reporting process, making any mistakes easier to spot and correct online as soon as they’re made and allows government social policy to be based on more real time information. Paper IR330 and KiwiSaver deduction forms for new employees will go online as well, making it easier for employers to enter the correct information when an employee starts.

Payday filing relates only to the need to report the earnings and PAYE information each pay to Inland Revenue. There is no change to the dates on which tax payments are due. These remain the same, either once or twice a month depending on whether your business is withholding less or greater than $500,000 per year. Employers may choose to make payments on a more frequent basis, but this remains optional.

Are you ready?

If you’re an employer, you will need to ensure your software system, or that of your payroll provider, is compatible with payday reporting by 1 April 2019. We suggest you talk to your payroll provider about the changes and how they are planning to be ready.

Now is a good time to review how well your current payroll system is working for you, and if your needs have changed. Is your system built using a modern cloud infrastructure, capable of adapting to the upcoming changes quickly without messy updates?

It’s also a good time to look at whether you need to make changes to your payroll procedures, similar to when KiwiSaver was introduced. Getting the right procedures in place can take time, so it’s good to have some time up your sleeve.

How can Datacom help?

We’ve been working collaboratively with other payroll software companies and the IRD to define and understand all the requirements for payday reporting. We test all our processes carefully and manage a roadmap and migration to the new reporting processes, to ensure any issues that arise are identified and fixed immediately.

The new reporting framework will be seamlessly integrated into Datacom’s existing payroll software to avoid any disruption to our customers. Our system will be in line with payday filing before 1 April 2019 when the new process becomes mandatory.

What’s more, Datacom’s payday filing not only files the Employment Information files, and Employee Details files for changes in employee records, but if corrections are made to previous returns, Datacom will automatically file these amendments (called Employment Information Amendment files). With some solutions you may find are not providing this functionality, instead making users make amendments manually through the myIR web portal on the IRD website.

Combining Datacom’s payday reporting services with our PAYE Intermediary service allows payroll managers to not worry about their payday filing and PAYE payment responsibilities as Datacom fills this role.

How will this affect you?

If you are a Datacom payroll customer, we already handle the Employer Monthly Schedule (EMS) filing requirements for most organisations, which means that we’re already filing your PAYE information automatically each month without you having to do a thing.

Payday filing will be handled in much the same way, which means you should notice very little difference (if any) come April 2019. Datacom will simply report this information for you on a real-time payday basis instead of once a month. There is nothing you need to do differently.

If you’ve been filing your EMS manually each month, we recommend you consider filing electronically instead before payday reporting comes into effect. For those that report this information yourselves, we will provide you with a file so that you can manually upload this through myIR each pay day. You may want to change to automatic filing when payday filing comes about to avoid what was once a monthly task becoming something that you have to do every pay run.

Will I notice any differences?

The standard IR348 Report and IR348 Negatives reports will no longer be useful as the information filed to Inland Revenue will be reported on a pay run by pay run basis. We can provide a copy of the payday files on a pay day by pay day basis if required for information purposes. If you would like this option turned on for you, please contact the DataPay Helpdesk Support or if you're our bureau customer you can contact your EasiPay consultant and provide the name and email address of the person (or people) that should receive these files and they will set this up for you in the DataPay payroll system in preparation for payday reporting.

What is the benefit to business?

If you work with Datacom we offer the solutions and support and take the worry out of this change. The new process is aimed to support business;

  • And will reduce the margin of error with payday filing.
  • Rather than creating additional processes in your payroll the new function will reduce the time processing payroll.
  • Should minimise penalty costs associated with incorrect filing and errors.
  • Take the risk out of not being compliant.
  • Reduce costs of your needing to upgrade your product as all Datacom solutions are Cloud hosted.

Summary

At Datacom we provide a user experience that supports our customers when legislation changes. Our Datacom payroll products continue to manage this process in the background without the user having to add additional steps to their payroll process.

Alternatives include manually inputting payroll information through the myIR portal directly, downloading files from your payroll system and uploading them to IRD through the myIR web portal (we do provide this option too, but consider this an inferior option to letting Datacom do this work for you), or manually initiating the file transfer directly from your payroll software (an extra step to remember to do each time).

If you’re a user of Datacom’s PAYE Intermediary service there is nothing that you need to do differently to transition to this new reporting requirement. Instead of filing your information monthly, Datacom will simply start reporting according to the new rules with Inland Revenue.

Simply put, our approach to payday filing is simple…. you don’t need to do a thing.

For further information from the IRD please refer to their website for details on the legislation.

If your business is not ready for Payday filing, then contact us 0800 72 97 97 and we can assist you.