Payroll News - 2008

Payroll News Issue 112 November 2008

• Using the right tax codes on the Employer monthly schedule (IR348) (EMS)
• E-services expanded and improved
• Adding up your Employer deductions (IR345) and Employer monthly schedule (IR348) (EMS) forms
• Are you a large employer?
• Employees' KiwiSaver statements
• Using the GAP payment code
• Imputation credit accounts (ICAs)
• Errors in the April and October issues
• EMS non-payment penalties now apply

Welcome to Payroll News

In this issue: Tips on using tax codes on the Employer monthly schedule (IR348) (EMS), your improved access to online services, adding up your Employer deductions (IR345) and Employer monthly schedule (IR348) (EMS) forms, large employer monthly filing, using the GAP payment code, imputation credit accounts (ICAs), and EMS non-payment penalties.

If you have a topic you'd like to see covered in this newsletter, please email us at payroll.news@ird.govt.nz and we'll aim to cover it in a future edition.

Using the right tax codes on the Employer monthly schedule (IR348) (EMS)

In the October issue of Payroll News we told you about ensuring employees are on the right tax code. We want them to be on the right tax code as it helps ensure they pay enough tax and the correct amount towards their student loan, if they have one. We're writing to employers requesting they change employees' tax codes if they're using the wrong one.

We've identified a number of simple errors being made by employers on EMS forms that mean in some cases we're writing to you unnecessarily. So, here are a few tips to help you when filing your EMS.

Start and end dates

Start dates are used when an employee first starts employment with you and a finish date is used when an employee finishes with you, otherwise leave the start/finish field blank. The only other time is if the employee is receiving paid parental leave (PPL), in which case a stop date is required when they go on leave and a start date is required when they return from leave.

Matching tax code and deduction

We've noticed in some cases the:

• correct amount is being deducted but the wrong tax code has been recorded on the IR348 form
• correct tax code is showing but the wrong amount is being deducted, meaning the employee is having too much or too little deducted.

Please ensure the tax code recorded on the EMS matches the amount of tax or student loan repayments being deducted. If we notice the tax code is wrong we'll write to you asking you to change it.

School children

If you employ school children (primary and secondary) they only need to be on the EMS if they will earn more than $2,340 during the tax year or belong to KiwiSaver. Their IRD number will also need to be recorded.

Your employees can work out if they're on the right tax code by using the Work out your tax code decision tree.

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E-services expanded and improved

A new service from Inland Revenue now allows you to view your account information online.

Until now, only your tax agent had online access to your account information. Now, you'll be able to manage your tax affairs better due to this direct access. All that's required is for an organisation's owner, or authorised representative, to call us, and after we've validated who they are, they will be given access to account information. They can then delegate access to other people in your organisation through a new application called Manage account access (MAA). Delegated people will then be sent User IDs and passwords.

The organisation's owner, or authorised representative, will be able to control which e-services other people in the organisation can access. For example, some may only get access to "Send and Receive Email", some may only get access to the "EMS (ir-File) service", or a senior staff member may have access to all e-services including "Look at Account Information".

Go to "Get it done online", "Manage account access (MAA)" and "Look at Account Information" to find out more.

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Adding up your Employer deductions (IR345) and Employer monthly schedule (IR348) (EMS) forms

When we receive your employer deductions form/s (see note below), your EMS form, and your employer deductions payment we make sure these add up to the same amount. If they don't balance it can lead to a debit or credit on your account. When filing these forms, please check the following:

• the form totals and payment balance
• your employees' details are correct.

Where we receive forms that don't balance, we may contact you to amend these. There are some circumstances in which the amendment may be delayed. For example, for large employers where the employer tax credit (ETC) is not equal to the employer contribution (CEC) amount, we are unable to alter the figures in period 1 (1st to 15th of the month), and we may have to make the changes in period 2 (16th to end of month). This means the money owed to you or that you need to pay to us is available, not on the 20th of the same month, but on the 5th of the following month, so you may be charged a penalty for late payment and/or use-of-money interest.

The quickest, most convenient and secure way to file your employer deductions and EMS forms is online at "Get it done online" using ir-File. If you do file online, please don't also send in a paper copy of the forms as this will cause confusion and problems on your account.

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Are you a large employer?

If, in the previous year, the total amount of PAYE and ESCT deducted was $100,000 or more, Inland Revenue classifies you as a "large employer".

If you become a large employer you must file per month as follows:

In the first half of the month (1st to 15th of the month)

1. Deductions from wages paid in the first half are paid to Inland Revenue by the 20th of the same month.
2. 
   
   

   Example - deduction payment
   Period 1	Due date
   1 October - 15 October	20 October
   1 November - 15 November	20 November

   
   
3. Complete and send in an Employer deductions (IR345) form.

In the second half of the month (16th to end of the month)

1. Deductions from wages paid in the second half are paid to Inland Revenue by the 5th of the following month. The only exception is the second period of December, when payment is not due until 15 January.
2. 
   
   

   Example - deduction payment
   Period 2	Due date
   16 October - 31 October	5 November
   16 November - 30 November	5 December

   
   
3. Complete and send in an Employer deductions (IR345) form
4. 
   
5. Complete and file the Employer monthly schedule (IR348) electronically through ir-File, by the 5th of the month following the month the deductions were made.
6. 
   
   

   Example - employer monthly schedule
   Month	Due date
   1 October - 31 October	5 November
   1 November - 30 November	5 December

Paying the amount you have stated on the Employer deductions (IR345) form

When paying electronically please remember to either:

• complete the IR345 form (EDF) online at ir-File
• complete the paper IR345 form and send it to us to ensure we get the information to process your payment correctly. Remember to keep a photocopy for your records.

When paying by cheque please remember to either:

• complete the IR345 form (EDF) online at ir-File, remove just the payment slip from the paper form and send it to us with your cheque
• complete the paper IR345 and send us the whole completed form along with the cheque to ensure we get the information to process your payment correctly. Remember to keep a photocopy for your records.

Filing the Employer monthly schedule (IR348) (EMS)

If you are a large employer you need to file the EMS form once a month using ir-File, unless you have an exemption. It's quick, convenient and secure to file the EMS on our website. Go to Get it done online > File an employer schedule (ir-File) service.

When filing the employer monthly schedule online, don't send us a paper copy. Just print the confirmation page of the schedule, sign it, and keep it for your records.

If you want to find out more about exemptions, have any further queries or require assistance, please call us on 0800 377 772.

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Employees' KiwiSaver statements

Your employees may ask you questions about their KiwiSaver deductions and scheme provider statements not being the same.

Here are some reasons identified that may cause a delay in employees' statements from scheme providers balancing with what they've had deducted:

• We're having trouble balancing the EMS. We encourage you to file online - this reduces errors and significantly cuts processing times. Go to "Get it done online" for more information.
• Employer contributions have not been received
• There are timelags because the payments don't go directly to scheme providers - you pay employee deductions and employer contributions to us, then we pass the payments to scheme providers once we've made sure that the EMS is in order.

If employees want to balance their accounts, we recommend they do it every six months.

If your employees have any further questions, they can go to the KiwiSaver website, or call 0800 KiwiSaver (0800 549 472).

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Using the GAP payment code

If you pay your taxes electronically, it's important to code your payments correctly.

Please use the GAP code only when you're paying your GST and provisional tax together. If you're paying them separately, please use the GST and INC codes.

If you choose the wrong code, there may be delays in crediting your payments to the right account.

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Imputation credit accounts (ICAs)

If your company return (IR4) results in a tax refund, your credit UOMI (use of money interest) is calculated on your ICA balance if this is less than the amount of your refund.

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Errors in the April and October issues

April

There was an error in the "KiwiSaver compulsory employer contributions" article that appeared in the April 2008 issue of Payroll News.

The third bullet should have read:

• has not reached the age of eligibility for New Zealand Superannuation (currently 65), or has not been a member of a KiwiSaver scheme or complying fund for five years, whichever date is later.

October

The article "Large employers filing of employer monthly schedules (EMS)" contained a mistake in the table "Large employer due dates". The due dates for large employers for the EMS are the 5th of the following month. The table should have read:

Large employer due dates
Period PAYE deducted	Payment due date Employer deductions (IR345)	Due date Employer monthly schedule (IR348)
2/10/08	20 October 2008	5 November 2008
9/10/08	20 October 2008	5 November 2008
16/10/08	5 November 2008	5 November 2008
23/10/08	5 November 2008	5 November 2008
30/10/08	5 November 2008	5 November 2008

We apologise for these errors. You'll find the online versions of the newsletter have been amended.

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EMS non-payment penalties now apply

From November you may get a non-payment penalty, as well as a late payment penalty, if you don't pay your Employer monthly schedule (IR348) on time.

If you think you may have difficulties making a payment, please call us as soon as possible on 0800 377 774. Find out more information about penalties and interest.

Alan Quinn
Manager
Customer Insight

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Date published: 31 Oct 2008

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