Payroll News - 2005

Payroll News Issue 72 March 2005

• A new image - same return
• 2006 tax tables
• ACC earners' levy rate
• Employing seasonal workers
• Can't pay you tax due?
• Late payment penalties and interest

Welcome to Payroll News

In this issue we tell you about our new image return and we remind you about late filing penalties that may apply for late employer monthly schedules (EMS). We also advise you to contact us if you can't pay your tax by the due date.

If you have an employer topic you'd like to see covered in this newsletter please write to the Editor, Payroll News, PO Box 2198, Wellington or email us at payroll.news@ird.govt.nz and we’ll aim to cover the topic in a future edition.

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

A new image - same return

You will notice your Employer monthly schedule (IR348) (EMS) looks a bit different. We've made some changes to the EMS so we can use imaging technology. This will speed up the processing of your EMS.

There is no change to the information you need to provide.

What's changed on the EMS?

• We have replaced the $ value panels that you fill in with individual character boxes. Please print clearly and only enter one character in each box.
  
  
• The number of employee lines on the IR 348 has been reduced from 7 to 6. This may mean that you get an additional page (an IR 349) to complete because there are fewer lines available on the IR 348.
  
  
• The "Tick if lump sum payments made and taxed at lowest rate" column has been moved to above "PAYE and/or withholding tax deductions" column.
• Black lines have been inserted around each employee's details to clearly separate them.

We have also lightened the background colour, as requested by a number of you. This will improve the photocopy quality for those of you wanting to keep EMS photocopies.

2006 tax tables

We will soon begin posting out your PAYE deduction tables for the year ending 31 March 2006. The rates in these tables apply from 1 April 2005. Use these tables for pay periods ending on or after 1 April 2005.

If you have not received your tables by mid-March or you haven't received the correct deduction tables you require, phone us on 0800 377 772. Please remember to have your IRD number handy.

If you are a Corporates customer (companies with annual turnover of $100 million or more and taxpayers subject to special legislation, such as mining and crown entities) please phone us on 0800 443 553.

The new deduction tables are also available from our website www.ird.govt.nz or you can order copies by phoning INFOexpress on 0800 257 773 from 8 March.

ACC earners' levy rate

For the tax year commencing 1 April 2005, the ACC earners' levy rate will remain at 1.2 cents (GST-inclusive) in the dollar. The annual maximum earnings on which earners' levy is payable has increased from $92,189 to $94,226 for salary and wage earners. This change to the annual maximum earnings is included in the PAYE deduction tables, which apply from 1 April 2005.

Employing seasonal workers

Some of you may employ seasonal workers such as fruitpickers at certain times during the year. People employed in agricultural work on a day-to-day basis for up to three months are considered casual agricultural workers. They must be employed for the exclusive purpose of doing seasonal agricultural, horticultural, orchard, tobacco farming, market gardening, or nursery work or other similar seasonal work. They are taxed through the PAYE system.

Tax rate

If you intend to employ a casual agricultural worker please deduct PAYE at a flat rate of 22.2 cents in the dollar (this includes ACC earners' levy). If they do not complete a Tax code declaration (IR330), deduct PAYE at the no-declaration rate of 46.2 cents in the dollar (this includes ACC earners' levy). You need to keep employment records for all these employees.

Allowances

If you have provided casual agricultural workers with allowances such as free meals, board or other personal expenses instead of paying them for their services, you still treat these allowances as monetary remuneration. Include them as part of the worker's gross income and tax them in the manner described above. For more information on allowances please see the Employer's guide (IR330) which you can access from our website, or you can call us on 0800 377 772.

Note

Please note that agricultural contractors and shearing contractors are not employees subject to PAYE deductions. Withholding tax should be deducted from payments made to these contractors at the rate listed on page 14 of the PAYE deduction tables and on the back of the Tax code declaration (IR 330).

Can't pay your tax due?

We realise that at times, some people may not be able to make their payments on time. If you think you can't pay the full amount by the due date, please contact us as soon as possible by phoning 0800 377 771.

Note

Even if you cannot make the payment, you still need to send in your return on time. By contacting us early and entering into an instalment arrangement with us before the due date, you will avoid being charged the 4% penalty. No further penalties will be charged during the term of the arrangement, provided the agreed payments are made by the instalment dates.

Payment options

Paying your tax by the due date is still the best option. However, if you are unable to pay your tax in full and on time, we can discuss your current circumstances with you and help you work out the best options for paying the amount due. We take your individual circumstances into account in reaching a decision. We may consider options such as some form of financial relief, including payment by instalment, if payment in full would result in hardship.

Late payment penalties and interest

If you don't pay your PAYE on time, you will be charged late payment penalties as follows:

• 1% of the unpaid tax, charged the day after it's due
• 4% of the unpaid tax (plus the 1% penalty), charged seven days after it's due
• 1% of the unpaid tax (plus penalties already charged) each month the amount remains unpaid.

Interest is calculated daily on the unpaid amount including penalties. Penalties and interest are charged on amounts greater than $100.

Late filing penalties

We would like to remind you that late filing penalties may apply if your Employer monthly schedule (IR348) (EMS) is filed late or if you don't file one for the month.

Late filing penalty rate

The late filing penalty is a flat rate of $250 for each late EMS. This amount is payable one month after the due date of the schedule. If the late filing penalty is not paid by the due date, late payment penalties and interest may also apply. However, we do understand the challenges that you may face as an employer and that the unexpected does happen from time to time. With this in mind, if you do file your schedule late we won’t automatically charge the late filing penalty if:

• this is the first time you've filed late, or
• you have filed all your returns on time in the previous 12 months.

Instead, we will send you a letter reminding you to file your schedule. After this, if you file a schedule late during the next 12 months, we will charge you a late filing penalty.

If you are a large employer (employers whose gross annual PAYE and specified superannuation contribution withholding tax deductions are $100,000 or more) you must file your employer monthly schedules electronically, unless you have an exemption. There is a penalty if you do not. The penalty is the greater of $250 or $1 for each person employed at any time during the month covered by that schedule.

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Date published: 28 Feb 2005

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