You might have heard already about payday filing, but here is some information that might be helpful. Currently each month you would file either by paper or electronically your employer monthly schedule (EMS IR348) and your employment deductions (IR 345) to Inland Revenue (IRD) and make payment on your relevant due date (small businesses generally the 20th of each month). Now you can choose whether to file your employment information each payday instead of filing an employer monthly schedule (EMS IR348) each month. Payday filing is currently voluntary, however come the 1st April 2019 this will be mandatory.
At its most basic payday filing is an online filing option where you would send in your employment information each payday, or within 2 working days after payday. So if you pay weekly you would file weekly, fortnightly/fortnightly etc.
You would also include details of new or departing employees at the same time. This would include employee’s start and end dates, contact details and date of birth and would need to be provided to Inland Revenue (IRD) prior to your employee’s first payday. You won’t need to provide this information for existing employees. So you need to let your new employees know this information is being given to IRD.
However, there are options; if your annual deductions (annual PAYE and ESCT deductions) are less than $50,000 then you can file electronically or by paper after 1stApril 2019 and can do so within 10 working days after payday or choose to file on the 15thor last day of the month. If these deductions are over $50,000 then you must file electronically within 2 working days. If you opt in to payday filing before the 1stApril 2019 you must file electronically.
If you do opt in early then you can’t revert back to monthly filing. You can opt in through your MyIR account with IRD – use the “I want to” link under My Business. Once opted in you will see a Payroll Returns account appear. If you don’t yet have a MyIR account then please set one up now. IRD now send correspondence to MyIR accounts rather than posting and you have access to secure mail to message IRD rather than wasting precious minutes on the phone. It’s also easier for you to update your details with IRD when you need to.
If you currently use software that let’s you submit your files direct to IRD then you don’t need to opt in. Filing your first payday employment information file will let IRD know you’ve chosen to opt in.
There are no changes to current payment due dates or the way you pay - you'll also still need to file an Employer deductions (IR345) and pay monthly (20th) or twice-monthly (5thand 20th) like you do now.
Why is IRD making this change? It gives Inland Revenue more timely and accurate information, which will then be used to give your employees more certainty about their tax obligations and entitlements such as working for families tax credits (WFFTC). Under the current system IRD receive this information up to a month and a half after the payment to your employee – not helpful if you are relying on accurate WFFTC payments or other benefits. No one likes to have to pay back money that they have received in error because their wages changed and payments not adjusted through no fault of their own.
Need to discuss payday filing or need a payroll system give me a call.