From 1st April 2019 Payday Filing of employment information to Inland Revenue becomes mandatory. This change will affect everybody who employs staff. If you have some time over the Christmas break, you may like to consider how this affects you. However, we request that you do not ring us about this until after the 14th January 2019 when we are back at work.
What is Payday Filing?
- This is the requirement to send the pay details of your employees to the Inland Revenue Department (IRD) every time you pay them. This will replace the current PAYE return that you file once a month (twice a month for large employers). For example, if you pay staff on a weekly basis, you will need to provide this information to IRD every week.
- You will also need to provide employee details for new and departing employees to IRD. This information must be provided before any new employees’ first payday and includes
- Start and end date of employment
- IRD number
- Contact details
- Date of Birth (if provided to you)
- How often you pay your PAYE etc is not changing – this will still happen on the 20th of the month following wages payments (or twice monthly for large employers)
Your business can deal with Payday Filing in one of four ways:
- Using a manual payroll system filing paper returns to IRD (only available to employers who pay under $50,000 in PAYE and ECST)
- Using payroll software
- Using a PAYE intermediary (this will generally be through a software provider)
- Instructing Bailey Ingham to manage your payroll and IRD filing obligations.
Following is more detailed information on the IRD requirements and the options available to you.
Payday Filing Options:
- This option is only available to Employers with less than $50,000 PAYE & ECST deductions per year.
- Payday information may be submitted on paper forms to IRD within ten working days. This must reach IRD in this time – so postal times need to be considered
- These employers do have the option of paper filing twice a month – on the 15th and the end of the month.
Electronic Filing – three options:
- Direct from Payroll Software
- This requires payday filing compatible software. There are many providers who offer this. (See below)
- File upload via myIR
- Similar to the existing ir-File process that some of you may currently be using
- Onscreen via myIR (employers will manually key in information)
If you file electronically you must do so within two working days of the payday.
Making Payroll Easier:
Review how often you pay staff. We have clients who pay staff several times during a month. For example, they may pay some staff weekly, others fortnightly and then some twice monthly. In addition, they may pay casual workers on an ad hoc basis. This potentially could mean that you are having to submit information to IRD many times during a month. We suggest you bring all staff into line, so they are all being paid on the same day and pay cycle, For example it may suit your business and employees to pay everyone fortnightly on a Tuesday. Thus, you will only need to payday file once every fortnight. We also suggest that you don’t pay your employees on a Monday – as there are several public holidays that fall on a Monday.
Use Payroll Software
There is a wide variety of products on the market to choose from. Most of these are web based and therefore do not require downloading onto your computer. One of the key benefits is that, when used properly, leave calculations become much simpler.
With the introduction of Payday filing, payroll software has become even more attractive. With many of them, once you have completed a pay run for your employees, you will simply be able to file the payday information with IRD by pushing a button.
There are many payroll software packages on the market – and it is important that you choose one that suits your business best. If you are already using an accounting software package (like Xero or MYOB), we suggest that you explore the options they offer, as many payroll packages will integrate with the accounting software. Many will offer free trial periods for you to get a feel for how it works. It is important that you have a good understanding of what cost is involved with each one. The price is usually determined by the number of employees you have. We have given an indication of the price in this newsletter, however please note that these may change, depending on your circumstances.
Here are some that we suggest you look at:
We have found this software to be quite suited to farming payrolls. It has the ability to enter hours worked each day which is useful for public holiday calculations. The cost is $5 per pay run plus $1.89 per payslip plus bank fees and GST.
MYOB Payroll Options
MYOB has several different payroll software packages. If your payroll is relatively straightforward MYOB Essentials is probably suitable. The cost is $30 per month for up to 10 employees plus bank fees and GST. If you decide to use MYOB Essentials we may be able to get this at a discounted price for you.
The cost is $10 per month for one person + $1 per month for each additional person. You do however have to have a Xero accounting subscription also. If you do decide to use Xero, we may be able to get this for you at a discounted price.
This is one of the most popular payroll packages in New Zealand. The cost is $20 monthly plus $0.99 per payslip for 1–5 employees plus bank fees and GST
Many of the software companies use PAYE Intermediaries. This makes the payroll process even easier. Once you have entered all your employees’ information and pay details an intermediary will do the following:
- Deduct the total gross wages from your nominated bank account
- Pay net wages to your employees
- Email payslips to your employees
- File all necessary paperwork with IRD
- When your PAYE and other deductions are due to be paid to IRD, it will pay this directly (eliminating the need to for you to calculate what this payment should be and remembering to pay it.)
This may not suit all clients for cashflow reasons but is worth considering.
Services We Provide
At Bailey Ingham we manage the payroll for a number of clients. We are in the process of updating our systems in preparation for Payday Filing. If you would like us to manage your payroll, please contact:
- Donelle Burton
- Rosemary Johns
- Lauren Hill
- Bridget Boshier
We will shortly be updating our website with more information about Payday filing and links that may be useful.
Keep an eye out for information from the Inland Revenue Department. They are sending information out regularly and this will explain further what you need to do to meet your Payday filing commitments. You can visit their website for further information via this link
A Final Word
Unfortunately employing staff has become increasingly complex in recent years. Payday filing will make it a little more difficult in the short term. However, like the introduction of GST, Kiwisaver etc, it soon becomes a regular part of doing business. We are sure there may be teething problems initially, however we will be able to work with you to resolve these. We are confident that if you start using payroll software, you will quickly see the merits in using this rather than a manual system.
Please feel free to contact us in the New Year if you do have any queries.