Payroll News - 2008
Payroll News Issue 113 December 2008
- Filing the Employer deduction form IR345 (EDF) onlie
- Updating your payroll software
- Employee start and finish dates
- KiwiSaver update
- Holiday pay and child support deductions
- Child support Christmas hours
- ir-File availability
- Payment due dates over the holidays
Welcome to Payroll News
In this issue: filing employer deduction forms online, an update from KiwiSaver, employee start and finish dates, holiday pay and child support deductions, and our services and payment due dates over the holidays.
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.
Filing the Employer deduction form IR345 (EDF) online
Did you know you can now file your Employer deduction IR345 (EDF) form online using ir-File, as well as your Employer monthly schedule IR348 (EMS)? This option allows for a faster, more secure transfer of information to Inland Revenue, offering you the opportunity to save time and money.
There is a new ir-File demo which makes it easier than ever to understand the steps involved. It's a copy of the real site that you can explore anonymously, without sending any details to Inland Revenue. You can walk through the screens at your own pace, seeing how everything works. Go to "View demonstrations" to check out the online demo.
Updating your payroll software
If you're using a Payroll Software package to calculate your tax deductions, please contact your software provider to make sure you're using the most up-to-date version. Having the latest software ensures that you are deducting your employees' PAYE, student loan, child support, ESCT and KiwiSaver deductions correctly.
Employee start and finish dates
When filing your Employer monthly schedule IR348 (EMS) by paper or electronically please record the date your employees start and leave your employment. This information affects a lot of other entitlements for your staff. It also helps us avoid sending information to you when that staff member has already left your employment.
If you are changing business and IRD numbers or amalgamating and restructuring your business it is important you record cease dates for all employees when filing your last EMS.
KiwiSaver update
Over 800,000 KiwiSaver members
Just over one year after KiwiSaver began, 800,000 New Zealanders are members. Nearly 30% of these members are under the age of 25. This is a fantastic effort by both employers and members.
Treatment of Employer superannuation contribution tax (ESCT) in the calculation of Employer tax credit (ETC)
In the September edition of Payroll News we talked about the treatment of ESCT in the calculation of ETC. We've been working with payroll software providers to ensure their software now treats ESCT correctly in the calculation of ETC. As well as this, changes to ir-File have been made and it's now able to accept schedules submitted according to the new specification.
If you believe your ETC has been calculated incorrectly in previous months or you may not have been paying ESCT correctly, please call us on 0800 377 772.
What to do when your employee is over 60 or under 18 years old
Employee over 60 years:
- An employee joins KiwiSaver when aged over 60, but not yet aged 65:
They must be a KiwiSaver member for a minimum of five years, and won't be able to access their savings for five years. As a member for those five years the same obligations as normal members will have to be met:
- the employee must have KiwiSaver deductions made from his/her salary (unless on a contributions holiday)
- the employee will qualify for member tax credit for the five years
- you must pay compulsory employer contributions, for the five years, provided the member is still required to have deductions made from their pay. If the member is not paying you're not required to pay.
(Note: You can still pay voluntary contributions if you wish) - you can claim the employer tax credit on your contributions, including any voluntary payments (up to the relevant threshold).
- An employee joins KiwiSaver before turning 60 years of age:
- both employee deductions and compulsory employer contributions stop when the employee turns 65
- both the employee and you can continue to pay voluntary payments to KiwiSaver after the employee turns 65. However, the employee will not qualify for the member tax credit and you won't be able to claim the employer tax credit, after the employee turns 65.
Employee under 18 years:
If you have a new or existing employee under the age of 18 they can join KiwiSaver through a KiwiSaver scheme provider. Once an employee under 18 is accepted by the scheme provider, we'll write to you and ask you to start deducting member contributions. We'll provide you with the contribution rate for that employee, their name and IRD number.
If an employee is a KiwiSaver member and under 18 you'll still need to deduct member contributions even though they may earn less than the annual amount that is required to have PAYE deducted. However, you're not required to make compulsory employer contributions on behalf of employees under 18 and you cannot claim the employer tax credit, even if you make voluntary employer contributions.
It's important to remember that while employees under 18 can join KiwiSaver, they shouldn't be automatically enrolled. The eligibility chart on page nine of your KiwiSaver employer guide (KS4) provides a simple process to help you work out whether a new employee should be automatically enrolled (unless you're an employer exempt from automatic enrolment).
Unsure of your employee's age?
An employee can rightfully refuse to give you their date of birth. If this happens and you don't make KiwiSaver deductions we'll let you know you're required to automatically enroll and make deductions for that employee when we receive your EMS with that employee's details for the first time. You'll not be penalised if an employee refuses to supply information or supplies false information.
Employees who receive accommodation benefits
From 1 April 2008 the definition of salary and wages was amended to exclude allowances paid in place of a benefit. This means the market value of accommodation that an employee may receive in connection with their employment is excluded from salary or wages for KiwiSaver purposes.
This benefit is liable for PAYE, but when you're calculating KiwiSaver, remember it should only be deducted from the employee's pay net of this benefit.
Example
A farm worker is living in a cottage which has a market value (MV) of $250 rent per week and they pay $100 per week:
| MV of accommodation | $250 |
| Minus rent paid | $100 |
| Accommodation benefit | $150 |
| Gross salary | $500 |
| Plus accommodation benefit | $150 |
| Taxable gross salary | $650 |
The employer needs to calculate the PAYE from the $650.
They should then minus off the accommodation and use this amount to calculate the KiwiSaver deductions and compulsory employer contribution (CEC):
Taxable gross salary $650
Minus accommodation benefit $150
Gross salary $500
Holiday pay and child support deductions
If you make child support deductions for an employee, you need to deduct it at the usual rate from their holiday pay.
Holiday pay paid in advance
If your employee requests their holiday pay before going on leave you still need to deduct child support - see example below.
Example
Tessa normally pays child support deductions of $50 a fortnight. In December, Tessa is taking three weeks' annual leave which is paid in advance, along with her normal fortnight's wages, in the last week of November.
| Normal child support deduction each fortnight |
| Divide $50 by two to get a weekly amount |
| Multiply $25 by 3 for the amount to deduct from her three weeks' holiday pay |
| The total child support deducted ($50 for the normal pay, plus $75 for the three weeks' holiday pay). |
When you fill in the child support portion of your Employer monthly schedule IR348 (EMS) please complete the child support code box with an 'A' to show that it's a deduction made in advance.
For December, the child support deductions will be less than the amount expected (based on the deduction notice applying). You need to use the code 'D' to show that the shortfall has been deducted in the previous month.
For questions about child support and holiday pay, please call us on 0800 220 222. If any of your employees have questions about child support they can call us on 0800 221 221.
For more information about the rules for holiday pay and how to calculate it, visit the Department of Labour's Employment Relations website or call their Infoline on 0800 20 90 20.
Child support Christmas hours
Inland Revenue's child support employer phone line will be closed over the Christmas and New Year holiday period from 5 pm on Wednesday 24th December and will re-open again at 8 am on Monday 5th January 2009.
Information about child support can also be found on our child support pages.
Our services over the holiday season
| Call center opening hours | |
|---|---|
| Tuesday 23 December | 8.30 am - 8 pm |
| Wednesday 24 December | 8.00 am - 5 pm |
| Thursday 25 December | Closed |
| Friday 26 December | Closed |
| Saturday 27 December | Closed |
| Monday 29 December | 8.30 am - 5 pm |
| Tuesday 30 December | 8.30 am - 5 pm |
| Wednesday 31 December | 8.30 am - 5 pm |
| Thursday 1 January | Closed |
| Friday 2 January | Closed |
| Saturday 3 January | Closed |
| Monday 5 January | 8.00am - 8pm (normal hours resume) |
ir-File availability
The ir-File system and the ir-File helpdesk will be unavailable from Thursday 25 December to Monday 29 December.
Payment due dates over the holidays
| Large employers | |
|---|---|
| Form | Due date |
| Employer deductions IR345 (EDF) (payments made 1st-15th of December) | Monday 22 December 2008 |
| Employer deductions IR345 (EDF)(payments made 16th-31st of December) | Thursday 15 January 2009 |
| Employer monthly schedule IR348 (EMS) for December | Thursday 15 January 2009 |
| Employer deductions IR345 (EDF) (payments made 1st-15th of January 2009) | Tuesday 20 January 2009 |
| Small or medium employers | |
|---|---|
| Form | Due date |
| Employer deductions IR345 (EDF) (paid in November) |
Monday 22 December 2008 |
| Employer deductions IR345 (EDF) (paid in December) |
Tuesday 20 January 2009 |
| Employer monthly schedule IR348 (EMS) for November |
Monday 22 December 2008 |
| Employer monthly schedule IR348 (EMS) for December |
Tuesday 20 January 2009 |
Wishing you a safe and happy holiday season
Payroll News comments generally on topical tax issues relevant to employers. While every attempt is made to ensure that the law is correctly interpreted, articles are intended to be a brief overview only and are not a full commentary or analysis of the law. The examples provided are not intended to cover every possible factual situation.
Alan Quinn
Manager
Customer Insight
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Other issues this year
Payroll News Issue 112 November 2008
Payroll News Issue 111 October 2008
Payroll News Issue 110 September 2008
Payroll News Issue 109 August 2008
Payroll News Issue 108 July 2008
Payroll News Issue 107 May/June 2008
Payroll News Issue 106 April 2008
Payroll News Issue 105 March 2008
Payroll News Issue 104 February 2008
Date published: 04 Dec 2008
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