How New Zealand employers run their payroll is about to change in a big way. From 1 April 2019, businesses will be required to submit employee information to Inland Revenue on payday, rather than on the 20th of each month as they’ve previously been doing. This change is part of a bigger play by IRD, which is designed to make it easier for New Zealanders to stay on top of their tax obligations.
With new legislation about to come into effect, it’s more important than ever to know what changes are coming and how they might affect you, or your business. Read on to explore the benefits of Payday Filing, how the new system will impact employers, how it works, and more.
What’s in it for business owners and their employees?
Payroll teams can simplify their financial reporting by incorporating it into their payroll process, doing it online makes it easy to manage, plus with no 20th of the month filing date to watch out for, accounting staff will become free to focus on other areas of the business that need their attention.
The benefits for employees are numerous, too. With more information flowing more regularly, IRD can automate personal tax returns while also providing tax credit information, student loan repayment details and KiwiSaver contribution updates that are crucial for individuals trying to keep an eye on their finances.
How does it work?
There are a few things to keep in mind when it comes to changing over to the new system. First, business owners will need to ensure they have a myIR business account. Larger businesses paying over $50,000 in PAYE/ESCT a year are required to report this information electronically, while small businesses under this threshold have electronic or paper options.
Compatible payroll software helps submit the information automatically to IRD or generate the reports to be uploaded to myIR. Many New Zealand businesses already have the correct software, but it pays to check to avoid delays. You can contact your software provider to see if yours is compatible with the new system.
Depending on the software and filing method you choose, you may need to let IRD know you’re shifting to Payday Filing (some clever digital tools can help with this too!). Head to their website and follow these simple steps to get sorted:
- Log in to myIR
- Select the My Business Tab > More
- Select Payday Filing beneath the Other actions heading
- Read and complete the declaration and Submit
If you’d like to find out more about the changes, visit the IRD website for helpful videos that break the information down into easy-to-understand pieces.