Issue 62 April 2004 (Payroll News)

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Payroll News - 2004

Issue 62 April 2004

Completing your employer monthly schedules (EMS)
PAYE calculators
Your responsibilities as an employer
File your schedule on time
The 2004 income tax timetable

In this issue we talk about completing your employer monthly schedule (EMS); using the PAYE calculator; employer responsibilities and we remind you about sending your EMS on time.

Please pass this newsletter on to the person who deals with the payroll in your business.

Completing your employer monthly schedules (EMS)

Although we have mentioned this in previous editions of Payroll News, we've been asked to clarify how to complete your EMS in some circumstances.

What deductions to include in your EMS

It is important that the amount you pay to us each month matches the amount you show on your Employer monthly schedule (IR348) and Employer deductions (IR345) or (IR346) form. When completing the schedule, it doesn't matter when a pay period starts or ends. Only include those deductions from gross earnings actually paid or credited during the period covered by the schedule.

Nil returns

Your employer monthly forms should always be completed each month. If you do not pay salaries or wages in any period, you still need to send us your EMS and employer deductions form to avoid late filing penalties. Please write "nil" on the form, sign it and return to us in the freepost envelope provided.

No-declaration rate

If your employee does not provide an IRD number on their Tax code declaration (IR330), please remember that you must deduct PAYE at the no-declaration rate and enter the tax code "ND" on your EMS. The rate you deduct is either 46.2 cents in the dollar (including ACC earners' levy) for employees, or 15 cents in the dollar on top of the normal withholding tax rate for self-employed people.

If you send us an EMS which has an employee IRD number that is not valid in our system, the following monthly schedule we send you will have that employee's name printed on it, but the IRD number box will be blank. You will need to ask your employee to check the IRD number they have given you. Until the IRD number is corrected, please enter the "ND" tax code on your schedule and apply the no-declaration rate.

What to do if your employee is no longer working for you

You must let us know if your employee is no longer working for you. This is so we can keep up-to-date records of your employees. You can do this by making sure you complete the employment finish date column on your EMS. The finish date is the date the employee completely finished working for you. It is the earlier of the last day the employee worked for you, or the date you made the last payment to them.

What to do if a new employee starts working for you

All your new employees must complete a Tax code declaration (IR330). They don't have to complete an IR330 every year. They only fill it in when they first start working for you or if they want to change their tax code.

Each time a new employee starts working for you, you must provide us with their details. You can do this by making sure you complete the following columns on your EMS:

their name
IRD number
tax code
start date.

The start date is the date a new employee started working for you. You only need to enter the start date on your EMS once.

Note

The next EMS we send you will be preprinted with your employee's details except for their "Start date" which will appear blank. However, you do not need to provide the information again each time you send us your EMS.

What to do if you stop paying wages

You must let us know if you have stopped paying wages even if your business is still operating. This is so we can stop sending you employer forms each month.

You need to complete your final employer monthly schedule and employer deductions form up to the date you ceased employing. When completing your final EMS please:

complete each employee's finish date, and
also note on the schedule that you have stopped employing, and
provide us with the date that you stopped.

If you stopped employing some time ago but have continued to file nil monthly schedules, just phone us on 0800 377 772 and tell us the date you stopped employing. We can then stop sending you employer forms each month.

Note

If you continue to provide fringe benefits ("perks") to former employees after you have ceased as an employer, you'll need to keep filing fringe benefit tax (FBT) returns.

PAYE calculators

By now you should have received your PAYE deduction tables for the year commencing 1 April 2004.

The tables are also available from our website. If you prefer to use our online services, we have a PAYE calculator online. Here, you can work out how much PAYE to deduct from your employee earnings each week, fortnight, four weeks or month.

You can use the online calculator instead of the tax tables we send you.

Your responsibilities as an employer

As an employer you are responsible for making tax deductions from payments you make to the people who work for you. Some of you may also have to make other deductions such as student loan repayments and child support. You are responsible for paying these deductions to us on time.

Please remember that it is a criminal offence to hold on to PAYE deductions and use them for personal or business use. If an employer is prosecuted, the employer is liable to imprisonment for a term not exceeding five years or a fine not exceeding $50,000 or both. An employer may also be liable to shortfall penalties for an amount up to 150% of the outstanding tax deductions. The shortfall penalties will be charged in addition to the late payment penalties and use-of-money interest.

Don't find yourself in this position - ensure you pay on time or phone us on 0800 377 771 to make an arrangement if you're having difficulties.

File your schedule on time

We'd like to remind you that your schedule for the period ending 31 March is due to be filed by 20 April, or 5 April if you are required to pay your deductions twice a month. This is the final schedule for the tax year 1 April 2003 to 31 March 2004. We need your schedule to finalise the information that's provided to your employees.

It is important that monthly schedules are accurate and filed on time so that the information we give to your employees on their end-of-year summary of earnings and personal tax summaries is accurate.

If you need to make any changes to a schedule you've already filed, you can do this over the phone by calling us on 0800 377 772. Or you can send us an Employer monthly schedule amendment (IR344) form. You can get a copy from our website or by phoning INFOexpress on 0800 257 773.

The 2004 income tax timetable

The new tax year has arrived. During this period we will be sending out donation, childcare and housekeeping rebate claim forms, as well as personal tax summaries, summary of earnings forms and tax returns. Following is a timeline of when we'll be sending them out.

APRIL
Rebate claim forms

We will automatically send a rebate claim form to anyone who claimed for donations, childcare or housekeeper rebates last year. Receipts must be attached when making a claim. If you or your employees haven't received a form by the end of April and want to claim, visit our website or phone 0800 257 773.

Individual tax return (IR3)

If your employees also received income from self-employment, a rental property, withholding payments or a partnership, they will need to fill out an individual tax return, which will be sent out during April and May.

MAY
Summary of earnings

If you or your employees need to file a tax return and also received salary, wages or withholding payments you will need a summary of earnings. This will be sent out during May.

JUNE
Personal tax summaries

If an employee's only income is from salary and wages and we think they need an end-of-year tax square-up, we will automatically send them a personal tax summary during June.

JULY
Personal tax summary request

If your employees don't automatically receive a personal tax summary in June but think they may need an end-of-year tax square-up, they can visit our website or contact us for more information.

Check out our website to get information, forms, stationery, tax returns and to calculate your tax online.