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Payroll News - 2005

Payroll News Issue 80 November 2005

In this issue we tell you what to do when hiring casual staff or seasonal workers; how you can register for ir-File and how to use the companies office website to check whether your subcontractor is a company.

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.

Employer monthly deduction and payment due in November

Small employers (total PAYE and SSCWT deductions of less than $100,000 a year) pay their PAYE deductions and file their Employer monthly schedules (IR348) once a month on the 20th of the following month.

Large employers pay their PAYE deductions twice a month on the 20th of the month and the 5th of the following month. The IR 348 is also due on the 5th of the following month.

This year 5 November falls on a Saturday. If you are a large employer your Employer deductions form (IR345) or (IR346), your payment and your IR348 are due on Monday 7 November.

This year 20 November falls on a Sunday. Your Employer deductions form (IR345) or (IR346) and payment for this period will be due on Monday 21 November.

If you pay your employer deductions once a month your IR 348 is also due on Monday 21 November.

Hiring casual staff or seasonal workers

Some of you may soon be employing casual workers (such as in the retail or hospitality industry) or seasonal workers (fruitpickers or shearers).

If you intend to employ casual or seasonal workers, you need to make sure all new employees complete a Tax code declaration (IR330) form. Your employee's IR 330 tells you which tax code to use when deducting PAYE from their wages.

If your employee doesn't fully complete an IR 330 (for example, they don't provide their IRD number), you must deduct PAYE at the no-declaration rate of 46.2 cents in the dollar (this includes ACC earners' levy).

Please ensure that you show the start and/or finish date for each employee on the relevant Employer monthly schedule (IR348).

Casual agricultural workers

A casual agricultural worker is a person engaged in casual agricultural work on a day-to-day basis for up to three months. They must be employed for the exclusive purpose of doing seasonal agricultural, horticultural, orchard, tobacco farming, market gardening, nursery work, or other seasonal work of a similar nature.

The tax code for casual agricultural workers is CAE; your employee needs to select this code on their IR330. Tax for casual agricultural workers is set at a flat rate (currently 22.2 cents in the dollar including ACC earners' levy). When you complete your IR348 please use CAE as the tax code for these employees.

If your employees do not fully complete an IR330 (for example they don't provide their IRD number) you must deduct PAYE at the no-declaration rate of 46.2 cents in the dollar (this includes ACC earners' levy).

For further information call us on 0800 377 772.

Note:
Agricultural and shearing contractors (hired on a casual basis) are not employees subject to PAYE deductions. You should deduct withholding tax from payments you make to these workers at the rate listed in the PAYE deduction tables or on the back of the IR330. However, if these workers supply you with a Certificate of exemption (IR331) you can make payments to them without deducting withholding tax.

ir-File - thank you for your feedback

Our new-look ir-File system went live on 31 July 2005. Thanks to everyone who sent us feedback.

The majority of you who provided feedback told us that the on-screen form was too slow and you had to scroll down once you added new employee details. We have now made a number of adjustments to make the system more user-friendly.

Please keep giving us feedback on our new-look ir-File system and we'll let you know about any further adjustments that we make.

How can I register to use ir-File?

All employers can file an Employer monthly schedule (IR 348) electronically. It's a fast and efficient service that enables you to send your monthly payroll details to us over a secure internet connection.

There are two ways to file your employer monthly schedules:

  • On-screen form - you complete the schedules just like you complete the paper employer monthly schedules but this version is online, which is ideal if you keep a manual wagebook.
  • File transfer - this is a convenient method if you have a computerised payroll system as you transfer the file to ir-File, and then send it.

Before you register to use ir-File you will need:

  • a computer that can connect to the internet
  • an internet browser, either Internet Explorer 5 or higher, or Netscape Navigator 6.2 or higher
  • an internet connection
  • an email address.

To register to use ir-File go to: Services requiring login >Register now >Register for Online Services

When you register for ir-File you choose your user ID. We will then post a password to you within five to ten working days. You can start using ir-File as soon as you receive your password.

For more information about ir-File, go to our website www.ird.govt.nz

Provisional tax

If you pay provisional tax and have a standard balance date of 31 March, your second instalment of 2006 provisional tax is due on Monday 7 November 2005.

You can make your payment:

  • electronically through your bank
  • by sending us your cheque and payment slip in the reply envelope
  • by taking the payment (cash or cheque) and payment slip into your nearest Westpac branch.

Hiring subcontractors

From time to time you may hire subcontractors to do some work for you. If you hire a subcontractor you will need to deduct withholding tax from the (GST-exclusive) payments you make to them. The amount of withholding tax to deduct is shown on the back of the Tax code declaration (IR 330). The only time you don't need to deduct withholding tax is if the payment is made to a company or to an individual who has a certificate of exemption.

If you are unsure if your subcontractor is a company or an individual you can check by using the free service at the Companies Office website www.companies.govt.nz

This website can also give you the names of directors and shareholders of companies.

If the company is not registered with the Companies Office please ask your contractor to complete a Tax code declaration (IR 330) and deduct withholding tax from the (GST-exclusive) payments you make to them. If they do not fully complete the IR 330 an additional 15% withholding tax should be deducted from any payments you make to them.

Child support variation codes

It is important that the deductions shown on your Employer monthly schedule (IR 348) match the total amount of child support deducted from each employee's pay.

If the amount you deduct is different from the amount shown on the child support deduction notice, you must enter the child support variation code on the IR 348. This is because we keep a record of the amount we expect from each employee for a month. If we receive a payment that is less than expected, it can mean the employee is shown as having a debt and will need to make up the shortfall.

Also, if we receive more than is expected, without a variation code, this may be applied to any tax debt the employee has and, if it was meant to be an advance, could mean a shortfall in future payments.

To avoid situations where an employee is wrongly shown to have a debt because a different amount from that shown on the notice is deducted, please use one of the following variation codes. Enter these in the "CS code" box on the schedule.

A - Payment in advance

Sometimes you may pay an employee in advance, such as when they will be on holiday on the next payday. In this case, deduct the same amount of child support as you would if you were paying the employee on the usual payday. You must include the child support with the deductions for the period when the employee was given the advance pay. Your child support will be more than usual for that period, so enter "A" as the variation code.

C - Ceased employment

If an employee stops working for you, deduct child support only from the last full pay you gave them, and from any holiday pay owed. Enter "C" as the variation code, so we can remove the employee from your records. If an employee stops then restarts working for you within the same month, do not use this variation code.

D - Previously deducted

Sometimes the full amount of child support requested from an employee's wages may not have been deducted because you previously made an advance payment. Your child support will be less than usual for that period, so enter "D" as the variation code.

P - Protected earnings

If you are unable to deduct the full amount of child support requested from an employee's wages due to protected net earnings, enter "P" as the variation code. See the October edition of Payroll News or page 14 of the Employer's guide (IR 335) for more information on protected net earnings.

S - Short-term absences

If an employee is off work on unpaid leave for a short period of time and you are unable to deduct any or the entire amount of child support requested, enter "S" as the variation code.

O - Other

If none of the other variation codes can be used to explain why the amount of child support deducted does not equal the amount expected, enter "O" as the variation code.

For more help

If you have any questions about completing the child support requirements on the IR 348, please phone Child Support on 0800 220 222.

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Date published: 01 Nov 2005

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