Payroll News - 2004
Issue 63 May 2004
- Automated call recording for our call centres
- Withholding payments not liable for ACC earners' levy
- Withholding payments and GST
- Holiday pay and PAYE
- Taxing specified superannuation contributions
In this issue we introduce our automated call recording system for our call centres; we remind you how to show withholding payments in your Employer monthly schedule (IR348); we talk about how to tax holiday pay and specified superannuation contributions.
Please pass this newsletter on to the person who deals with the payroll in your business.
Automated call recording for our call centres
A new automated call recording package has been introduced in all Inland Revenue call centres from 1 April. This means that all calls received into our call centres will be automatically recorded.
We're doing this to help ensure that consistent and accurate information is provided to customers, and accurate information is gathered from our call centres.
Previously, we only recorded calls on a random basis. The introduction of all call recording will simplify our current processes and bring many benefits to both customers and Inland Revenue. For example, more meaningful information can be gathered because we'll have a broader range of calls to consider for ongoing improvement. This means we can continue giving quality advice and service to our customers.
We will inform customers that their calls will be recorded through messages in our booklets, forms and website.
Our business hours for phone enquiries
Just a reminder that you can call us toll-free during our business hours: 8 am - 8 pm weekdays and 9 am - 1 pm on Saturdays.
Our busiest time is between 9 am and midday and Monday is the most popular day for enquiries. You can also get information from our website at www.ird.govt.nz or phone INFOexpress on 0800 257 777.
Business customers can contact specialist staff directly on these numbers:
| Employers | 0800 377 772 |
| GST | 0800 377 776 |
| Income tax and general enquiries | 0800 377 774 |
| Overdue tax and returns | 0800 377 771 |
Please note that free calling does not apply to cellular calls.
Withholding payments not liable for ACC earners' levy
We'd like to remind you that when you are making withholding payments, you need to include the amount paid in the "earnings and/or withholding payments not liable for ACC earners' levy" box on your Employer monthly schedule (IR348). You also need to show a "WT" tax code on the schedule. People who receive withholding payments are treated as self-employed and are responsible for paying their own ACC premiums and levies. It is important to record their correct tax code as this information is used for ACC premiums and levies invoicing purposes.
Withholding payments and GST
If you're paying withholding payments to a contractor working for you who is registered for GST, you need to use the GST-exclusive amount of the withholding payment when calculating withholding tax deductions and completing your employer monthly schedule (EMS).
A self-employed person who is registered for GST will charge GST on goods and services supplied. This means the person's gross payment will include the GST charged.
If the self-employed person gives you a tax invoice, work out and deduct withholding tax on the amount excluding GST.
For example, you receive a tax invoice showing:
| Cost | $ 500.00 |
| Plus GST | $ 62.50 |
| GST-inclusive amount | $ 562.50 |
| Less withholding tax (20% of $500) | $ 100.00 |
| Net payment to the worker | $ 462.50 |
In the above example, you would deduct withholding tax from the $500 and show the $500 as the gross payment and the $100 withholding tax on the EMS. If the figure you have includes GST, divide it by 9 to find out the GST and subtract this from the total figure.
Note
Please remember to show a WT tax code when completing the EMS for a withholding payment recipient.
Holiday pay and PAYE
Changes to the Holidays Act 2003, setting minimum provisions for annual and public holidays and sick and bereavement leave, came into effect on 1 April 2004. To find out more about these changes, or the rules for holiday pay and how to calculate it, phone the Department of Labour's Employment Relations Infoline on 0800 800 863, or visit their website. The changes do not affect how to tax holiday pay. To remind you how much PAYE to deduct on holiday pay, follow these three simple steps.
If you are paying three weeks' holiday pay to an employee:
- Divide the amount to pay by three to get a weekly amount.
- Calculate the PAYE on this weekly amount using the weekly PAYE tables.
- Multiply the week's PAYE by three to get the total PAYE to deduct from the gross holiday pay.
You will also find the Calculate tax on holiday pay toolon our website very handy to work out how much to deduct from an employee's holiday pay.
Holiday pay and child support deductions
If you make child support deductions from an employee, you need to deduct it from their holiday pay as well at the usual rate.
Example
An employer normally deducts $50 child support per fortnight from an employee's wages. If the employer is paying three weeks' holiday pay in advance in December to cover the Christmas break, together with a fortnight's wages, they need to deduct a total of $125 in child support - $50 from the normal fortnightly pay, plus $75 from the three weeks' holiday pay.
When you fill in the child support portion on your Employer monthly schedule (IR348) please complete the child support code box with an "A" to show that it is a deduction in advance.
In the above example, the child support deductions for January will be less than the amount expected (based on the deduction notice applying). You need to use the code "D" to show that the shortfall has been deducted in the previous month.
To find out more about calculating PAYE on holiday pay, read page 12 of your 2005 tax tables or phone us on 0800 377 772. If you have any questions about child support and holiday pay, please phone us on 0800 220 222.
Taxing specified superannuation contributions
In the March issue of Payroll News we told you about a new option for taxing specified superannuation contribution withholding tax. As a result of that article we've been asked several questions about it. We've answered some of these below:
Do I include non-taxable allowances paid to the employee when calculating the previous year's salary or wages?
No - salary or wages means salary, wages or taxable allowances including all sums received by way of overtime pay, bonus, gratuity, extra salary, commission, or other remuneration of any kind, in respect of the employment of the employee. It does not include non-taxable allowances.
Do I include any specified superannuation contributions made on the employee's behalf when calculating the previous year's salary or wages?
No - these are excluded from the definition of salary and wages.
If I elect to use the new option for taxing specified superannuation contributions, do I need to advise Inland Revenue?
No - you do not have to advise Inland Revenue which option you are using to calculate specified superannuation contribution withholding tax (SSCWT). You will, however, need to ensure that your records reflect what rate you have used and how the rate was determined.
No changes have been made to the Employer deductions (IR346) form, so just include the total SSCWT deducted from all employees in Box 6 (regardless of which rate it has been deducted at).
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Date published: 23 Nov 2004
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