Issue 53 June 2003 (Payroll News)

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Payroll News - 2003

Issue 53 June 2003

the personal tax summary (PTS)
correcting your employer monthly schedule after it's been filed
lump sum payments
correction to the Fringe benefit tax return guide (IR 425)

The personal tax summary (PTS)

Some of your employees will shortly be receiving a personal tax summary from us for the 2002 - 2003 tax year. The PTS calculates a person's tax liability and shows if they have tax to pay or a refund due for the year. This form is preprinted using details of income earned and tax deducted from the employer monthly schedules you file throughout the year. That's why it's important that your schedules are always accurate.

If an employee questions you about the details on their PTS, please confirm that their income and tax deduction details match up with your wage records for the 2002 - 2003 tax year.

If the PTS shows different income details from your wage records, this might mean that some adjustments need to be made to monthly schedules you have sent us in the past. If there are a few changes to be made to your monthly schedules these can be done over the phone by calling us on 0800 377 772. Otherwise, send us an Employer monthly schedule amendment (IR 344) form (see the article below for how to make amendments). You can get a copy of theIR 344 from our website or by phoning INFOexpress on 0800 257 773. Your employees will need to call us themselves to provide their individual changes so their PTSs may be updated.

Note

While we will be sending a PTS to some people, there are others who will not need to request one from us. Major newspaper advertising in July will give details of who needs to do this and what they have to do. This includes those people who should request a PTS as they may be entitled to a refund.

Correcting your employer monthly schedule after it's been filed

This is a reminder about how to make an adjustment to a schedule you've already filed. You can do this by either filling in and sending us an Employer monthly schedule amendment (IR 344) form (order a copy from our website or INFOexpress on 0800 257 773) or by phoning us on 0800 377 772.

Using our 0800 number

If you only have a few changes you can make your amendments over the phone. Just call us on 0800 377 772 and a customer service representative will correct the schedule. Have your IRD number and the changes you want made on hand before you ring.

Using the IR 344 amendment form

The IR344 form can only be used for amendments to one month's PAYE details. If changes cover more than one month you should use a separate form for each month.

Enter your name, IRD number, and the period you are changing on the top of the IR344.

You can amend an employee's pay details by writing in their name and IRD number, the figures you originally sent in, and the changes to be made. You can amend up to three employees' details per form.

Using the IR344 is the most convenient and easy way of amending monthly PAYE details. However, if you are intending to write a letter to show the amendments, please make sure you include:

your name
your IRD number
the period you are changing
the name and IRD number of the employees whose details you are amending
original details sent in and details of changes to be made.

ir-File amendments

If you file your employer monthly schedule electronically, using our ir-File system, you will still need to make amendments by calling our 0800 number or by completing an IR344.

Lump sum payments

Lump sum payments are payments you make to your employees for annual or special bonuses, retiring allowances, redundancy payments, gratuities or backpay.

There are three tax rates for lump sums: 22.2 cents, 34.2 cents and 40.2 cents in the dollar (which include ACC earners' levy). Retiring allowances and redundancy payments are not liable for ACC levy so the rates for these are 21 cents, 33 cents and 39 cents in the dollar.

The rate you use will apply as follows:

22.2 cents in the dollar
when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is $38,000 or less
34.2 cents in the dollar
when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is $38,001 to $60,000, or
40.2 cents in the dollar
when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is greater than $60,000.

Example

You're going to pay a bonus payment of $1,800, and the employee's earnings for the last four weeks are $2,800.

Last four weeks' income	$2,800
multiply by 13 to get 52 weeks' income	x13
	$36,400
Add bonus payment	$1,800
Total income for full year	$38,200

The employee's total income for the year (including bonus payment) is between $38,001 and $60,000 so the bonus payment must be taxed at 34.2%. If the payment was for redundancy instead of a bonus, earner levy would not need to be added.

Your employees can also elect to have any lump sum taxed at a higher rate. They may choose to do this if, for example, they have another job or other untaxed income, such as rent. They will tell you if they want to use a higher rate.

If your employee has a student loan and uses an M SL, S SL, SH SL, or ST SL tax code, you will also have to deduct student loan repayments from lump sum payments.

Note

If the lump sum is taxed using the lowest rate (22.2 cents in the dollar), tick the circle "Lump sum payment taxed at the lowest rate" on the Employer monthly schedule (IR348) to show this.

Correction in the Fringe benefit tax return guide (IR425)

In the May 2003 edition of Payroll News we told you there was an error on page 21 of the Fringe benefit tax return guide (IR425) in both the 2002 and 2003 years.

In fact, the error only applies to the 2003 year of the guide. The instructions on page 21 for the 2002 year are correct. We apologise for any inconvenience caused.