Payroll News - 2007
Payroll News Issue 93 February 2007
- KiwiSaver and you
- 2008 PAYE deduction tables
- Provisional tax due date reminder
- Special tax code certificate
- New style certificate of exemption from withholding tax
Welcome to Payroll News
In this issue we tell you about KiwiSaver, the 2008 PAYE tables, getting a special tax code certificate and the new style certificate of exemption from withholding tax.
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 6140 or email us at email@example.com and we'll aim to cover the topic in a future edition.
KiwiSaver is the new work-based saving scheme that starts on the 1 July 2007 and as an employer you have an important role to play in its introduction.
Your role includes giving new employees a KiwiSaver information pack and deducting contributions from their first pay. Existing employees can also join the KiwiSaver scheme.
Any contributions you deduct and pass to us are transferred to a scheme provider.
In January we sent you a leafl et giving a brief overview of how the KiwiSaver scheme works and what your responsibilities as an employer are. We'll provide further information in our "how to" employer packs, which we'll send you in May or June.
We have also sent information about KiwiSaver to accountants, tax advisors and industry associations so they can answer any questions you may have.
Updates about KiwiSaver
To make it easy for you to keep up to date with what KiwiSaver means for you and your business, you can get updates emailed to you. Go to our website: KiwiSaver > KiwiSaver for Employers > and complete the subscription.
Default scheme providers
Where an employee doesn't select a savings scheme provider, we will allocate them a scheme (default provider). The default providers are:
If you have your own workplace KiwiSaver scheme, your employees will be allocated to your chosen scheme if they do not select one for themselves.
Extension of the specified superannuation contribution withholding tax (SSCWT) exemption
Currently employers are required to pay SSCWT on the specified superannuation contributions they pay to a registered superannuation schemes on behalf of an employee.
In September 2006 the Government announced that employer specified superannuation contributions, up to a capped amount, paid on behalf of an employee to their KiwiSaver scheme would be exempt from SSCWT.
In December 2006, this exemption was extended to employer specified superannuation contributions made to superannuation funds who met certain criteria.
This means that on or after 1 July 2007, all specified superannuation contributions an employer makes on behalf of an employee to either a KiwiSaver scheme or an approved superannuation fund, may be exempt from SSCWT. This exemption will be capped to the lesser of the employee's contribution to the scheme, or 4% of the employee's gross salary or wages.
For more information about KiwiSaver please go to KiwiSaver > KiwiSaver for Employers >
We will send you your 2008 PAYE deduction tables in early March, unless you've told us that you don't want to receive them. You will be sent either the 2008 Weekly and fortnightly PAYE deduction tables (IR 340) or the 2008 Four-weekly and monthly PAYE deduction tables (IR 341) or both.
The tables contain changes to the student loan and ACC earners' levy deductions. We've also changed the layout of the booklets from portrait (vertical) to landscape (horizontal). This is the result of us including two new KiwiSaver columns into the tax tables, which become effective from July 2007.
Please use these deduction tables for payments you make to your employees from 1 April 2007. Remember, if you use the online PAYE deduction tables under "Forms and guides" and you have either "bookmarked" or added them to your "favourites", you'll need to update the link to the 2008 PAYE deduction tables from 1 April 2007.
If you prefer, you can calculate your employee's salary or wages at Work it out > PAYE > PAYE calculator 2008.
The amount to deduct from holiday pay can be calculated at Work it out > PAYE > Calculate tax on holiday pay - 2008. Please remember to update your bookmarks for this calculator as well.
If you pay provisional tax and have a standard balance date of31 March 2007, we will send you a letter and payment slip in February advising you that your third instalment of 2007 provisional tax is due on Wednesday 7 March 2007. You can make your provisional tax 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
- by paying through your tax pooling intermediary company.
Some of your employees may have a special tax code or apply for one this year. A special tax code uses a tax deduction rate that we work out to meet your employee's individual circumstances.
If you are given a special tax code certificate you must deduct tax at the rate shown on the certificate. A certificate can be valid for a part or a full tax year, depending on when it was applied for. All certificates expire on 31 March each year. If you are not given a valid certificate by 1 April, your employee needs to complete a Tax code declaration (IR 330) and you should deduct tax using the tax code they have indicated. If your employee doesn't complete an IR 330 you'll need to deduct tax using the no-declaration ("ND") rate.
We have made some changes to the certificate to make it easier for you.
Previously, it showed a flat rate of PAYE deductions, as well as the amount of ACC earners' levy.
The certificate now shows one figure which includes earners' levy.
See example below.
From this year we will be issuing a "new style" certificate of exemption.
The new certificates:
- are a convenient credit card size
- have more security features
- have exemption periods that range up to five years.
The new style certificate of exemptions will be effective from 1 April 2007. Contractors will be receiving their certificates over the next few weeks.
What you need to do
If a contractor shows you a certificate please check that:
- the certificate is original
- it hasn't expired
- the name on the certificate is the same as the name on the contractor's invoice.
Photocopy the certificate for your records. You may find that some distortion occurs, this is due to the special coating on the certificate, but the relevant details about the contractor should be legible.
If you need more information visit Withholding tax> or call 0800 377 772.
The new style certificate looks like this.
PDF | 138kb | 2 pages
Other issues this year
Payroll News Issue 99 August 2007
Payroll News Issue 98 July 2007
Payroll News Issue 97 June 2007
Payroll News Issue 96 May 2007
Payroll News Issue 95 April 2007
Payroll News Issue 94 March 2007
Payroll News Issue 103 December 2007
Payroll News Issue 102 November 2007
Payroll News Issue 101 October 2007
Payroll News Issue 100 September 2007
Date published: 25 Feb 2007