Running a business in New Zealand is hard work – there’s a lot to do and keep track of, even before you start turning a profit. But in the end, hard work usually pays off. There’s a reason so many people refuse to work for a boss and choose to put their blood, sweat and tears into their own venture – and that reason is attractive profits and financial freedom once it’s all running smoothly.
However, there are now big changes afoot to the way you report on your staff payments. This can be a bit overwhelming to consider, so we’ve broken it down into easy to understand steps below. By the end of this informative article, you’ll be an expert on the new system and will be able to steam ahead with your enterprise.
What’s is payday filing?
Payday filing is a new New Zealand federal government requirement that alters the way businesses submit employee payroll information to the Inland Revenue Department (IRD). At the moment, employers file staff wages and PAYE (pay as you earn tax) information to the IRD each month, despite the frequency with which staff are paid. Payday filing means you’ll need to report this data to the IRD each and every time your staff get paid.
When do I have to start?
Payday filing will become mandatory for all businesses with employees as of April 1st, 2019. No, this isn’t an April fool’s joke – it’s the real deal and to stay compliant with legislation you’re going to have to come on board with the process.
What information do I have to provide?
Each and every time you finish a pay cycle you’ll need to send a report off to the IRD. Your report needs to include information like the pay period, cycle (weekly, fortnightly, etc) and payday date. You’ll need to include your staff’s personal details, including their IRD number and tax code and the total gross earnings before PAYE. You’ll also need to include the amount of PAYE withheld, any child support or student loan deductions and any KiwiSaver deductions or your contributions to the scheme.
How do businesses submit the information?
This will depend on how much you’re paying in PAYE. If it’s less than $50,000, you’ll be able to submit either online or via paper. If over that sum, you have to submit online.
Why all the change?
Payday filing is an innovative policy implemented by the government to make payroll processes and reporting easier for businesses by integrating reporting requirements into the normal pay cycle. It replaces older, outdated systems of reporting making things easier for both commerce and government.
It also makes it much quicker and easier to fix mistakes once they happen, and ensure that the government receives all the current information for calculating business and personal tax rates.
Will my current software comply?
All major accounting softwares will be armed and ready to adapt to the new system. If you don’t have a software yet consider this resource which can help you choose one that’s right for your business.
Payday filing is a new system where you’ll report to the IRD with each pay cycle. It makes things easier for the government and businesses. You’ll need to switch to the new system by April 1, 2019. You’ll provide detailed information about your pay, and depending on the amount of PAYE you pay you can do this online or via paper. Each accounting software should be ready to adapt to the new system, and if you don’t have an accounting software, now’s the time to consider one.