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Payroll News - 2008

Payroll News Issue 108 July 2008

Welcome to Payroll News

In this issue: a thank you from Child Support, a reminder on how to complete the new Employer deductions form, an update on KiwiSaver, the introduction of nine-digit IRD numbers and some information on grace periods for late payments.

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 payroll.news@ird.govt.nz and we'll aim to cover it in a future edition.

Thank you from Child Support

A lot of families depend on you to deduct child support payments from parents' salaries or wages so we can pass on the payments. At Child Support, we recognise the complexities that may be involved and we appreciate how you assist with the collection of child support. In the 2008 tax year you helped to collect nearly $191 million dollars through deductions from your employee's wages. We're committed to working with you to help make the collection of child support payments as easy as possible. If you'd like to speak to us or arrange an advisory visit, please call us on 0800 220 222. We will visit you and go over any questions you may have about the child support deduction process.

The new Employer deductions form (IR345)

The new IR345 form was introduced in April 2008. The old form had a tear-off portion which could be retained for your records but this tear off portion is no longer available. You now need to send us the whole completed form and take a photocopy of the form for your records. We have received some of the new IR345 forms with the top of the form removed so we cannot see the employer's name, IRD number and period, making it very difficult for Inland Revenue to process the return.

Filing IR345 and paying electronically

If you file your IR345 form and pay electronically, please use the DED (employer deductions) tax code in the particulars field of the payment, instead of any specific single tax type. Using the DED tax code will help to improve payment processing and speed up the handling of contributions. You can go to Electronic payments or our Making electronic payments (IR584) guide (under "Forms and guides" ) to get an outline on the different ways you can pay tax - so we get the information we need to process your payments quickly and efficiently.

Update from KiwiSaver

Keeping a copy of your ETC calculations

The employer tax credit (ETC) is claimed by entering a total amount on the Employer deductions IR345) form. However, you need to calculate the ETC total by doing an ETC calculation for each employee.

Therefore, we recommend you keep a record of all of your detailed ETC calculations. If it appears that you have made a mistake in your ETC claim we may need to contact you, so please keep those calculations handy.

KiwiSaver member tax credit

From this month scheme providers will start to claim the member tax credit from Inland Revenue on behalf of their members. This is an annual credit for 1 July to 30 June which matches the member contributions of eligible members. In the first year of membership the amount of member tax credit they will receive is in proportion to the length of time they've been a member, up to $1,042.86. As an employer you don't need to do anything. If your employees have any questions, please refer them to their scheme provider.

Contributions holidays

From this month some KiwiSaver members will have been contributing to KiwiSaver for a year, so they can start to take contributions holidays. This is a break in contributions of between three months and five years.

Members apply for a contributions holiday by contacting Inland Revenue either through the KiwiSaver website, by calling us on 0800 549 472 or by sending us a Contributions holiday request (KS6) form - go to the KiwiSaver website. If they identify you as an employer we will send you a letter asking you to stop KiwiSaver deductions. We will also send a confirmation letter to the member. You should not stop KiwiSaver deductions until you either receive a letter from us or your employee shows you a contributions holiday confirmation letter from us.

Remember, if an employee is not having contributions deducted from their salary or wages while they're on a contributions holiday, compulsory employer contributions are not required. If you stop making employer contributions you can no longer claim the employer tax credit. However, if you continue to make employer contributions you can continue to claim the tax credit.

The contributions holiday is very flexible so employees can ask you to restart contributions while they are still on a contributions holiday, the contributions holiday can be ended early or renewed, and if the member has several employers they can ask that it be applied to some employers but not others. When a contributions holiday expires we will send you a letter asking you to recommence KiwiSaver deductions for that employee.

Employer KiwiSaver statement of accounts

You may have noticed two new fields on your KiwiSaver statements. The statements have been updated to include compulsory employer contributions and the employer tax credit which were introduced in April.

Visit the KiwiSaver website for further information.

Reminders

  • You can claim a tax credit of up to $20 per KiwiSaver or complying fund member per week or the amount contributed by you, whichever is the lesser.

    Please don't claim the maximum tax credit for the month if you have not contributed this amount.
  • Please don't file two Employer monthly schedules (IR348) in one month. If you're an employer who files twice monthly, please send us two Employer deductions (IR345) forms (one for the first half and one for the second half of the month) and one Employer monthly schedule (IR348) for the month.
  • When completing KiwiSaver employment details form file through ir-File, please ensure that both the employee address lines are filled in. These are both compulsory fields and when not completed can cause delays in the enrolment process.

Nine-digit IRD numbers arrive

Last month we began issuing 9-digit IRD numbers to new customers. This means that from now on, some customers will have an 8-digit number, and some will have a 9-digit number.

Things to remember:

  • all current numbers remain as 8-digit numbers, and all new customers get a 9-digit number
  • 8-digit numbers should start in the second box when you're completing a form that has 9 boxes for the IRD number
  • the display rules for GST numbers haven't changed - both 8 and 9-digit numbers should be displayed the same way.

If you have any enquiries or questions, please email us at number.extension@ird.govt.nz or find out about IRD numbers getting longer.

Grace periods for late payments

If you have a good payment record you may now be able to rest a little easier if you realise that you have missed a tax payment due date.

We understand that customers who usually file and pay their taxes on time may occasionally miss a payment. So, late payment grace periods have been introduced to allow you a chance to catch up if this happens. A grace period means that your late payment penalties may be temporarily delayed, allowing you time to make that late payment.

This change was introduced on 1 April 2008, so you may have already received a grace period. In the transition to this new system we did experience some technical issues and processing delays. If these issues affected you we can confirm they have now been resolved and apologise for any inconvenience you may have experienced.

If you're having problems meeting your due dates, it's best to get in touch with us as early as possible. Call us on 0800 377 772, we look forward to working with you and helping you to get your taxes right.

Completing paper forms correctly

We have an imaging system which scans all documents sent to us. Because the system can't differentiate between the different ways individuals complete dollar amounts eg $170.00, $170, $170 - it's important that the cents column is filled out like this, when completing paper copy forms such as the Employer deductions (IR345) form and Employer monthly schedules (IR348) (EMS): $170.00

Pre-printed forms already have a decimal point, so you do not need to include one, and please also don't write in a dash or 'nil' where there are no numbers required as these are often read as figures. An example of a form which has not been filled in correctly is below. By ensuring these forms are filled in correctly will reduce the number falling into error and minimise delays in the clearing of the forms.

Example of incorrectly completed form

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Alan Quinn
Manager
Customer Insight

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Date published: 25 Jul 2008

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