Payroll News issue 117 May 2009 (Payroll News)

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Payroll News - 2009

Payroll News issue 117 May 2009

Twice-monthly PAYE threshold goes up
The Job Support Scheme
Postal standards
Recognised seasonal employer (RSE) scheme
Are you having difficulty paying your tax?
- Personal tax summary (PTS)
Free tax seminars and workshops for employers
The independent earner tax credit (IETC)
FBT prescribed interest rate changes
Want to save time and money?

Welcome to Payroll News

In this issue: Twice-monthly PAYE thresholds, Job Support Scheme, personal tax summaries, independent earner tax credit and recognised seasonal employer scheme.

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.

Twice-monthly PAYE threshold goes up

New legislation, effective from 1 April 2009, increases the threshold for paying PAYE twice-monthly from $100,000 to $500,000, based on annual PAYE and ESCT (employer superannuation contribution tax).

So if your annual PAYE, including ESCT, is less than $500,000, you need only pay PAYE once a month. If you're registered for PAYE, both your Employer deductions (IR345) form and Employer monthly schedule (IR348) are due by the 20th of the month following the month PAYE was deducted in.

You would have received a letter in April from us if this change was going to affect you.

Please note the threshold requiring you to file electronically using ir-File is still $100,000.

The Job Support Scheme

The Job Support Scheme (formerly nine-day fortnight) is a government initiative, administered by Work and Income, to help employers retain employees who could otherwise be facing redundancy. Most employers with more than 100 staff in New Zealand are eligible.

To find out more about the scheme and whether you're eligible, visit the Work and Income website.

For information on employment relations, paid parental leave, holiday entitlements, sick leave and the Job Support Scheme, visit the Department of Labour's website.

Find out more about tax obligations for employers and employees.

Postal standards

New Zealand Post has issued new guidelines for postal mail. We're continuing to update our address records to meet these new standards but your mail delivery won't be affected.

Please remember to let us know if you change your address by:

updating your details online
going to "Forms and Guides" and complete a Have you changed your name, address or phone number? (IR238) form and sending it to us, or
calling us on 0800 227 774.

Recognised seasonal employer (RSE) scheme

Are you registered on the recognised seasonal employer (RSE) scheme? If you are, you should read this.

From 1 April 2009, please use the tax code NSW for any RSE workers you employ. It's a tax code specifically for workers on the RSE scheme. Don't use the CAE code because this is for New Zealand residents working as casual agricultural employees.

Please make sure any new or returning RSE workers who complete a Tax code declaration (IR330) choose the NSW tax code.

Make sure you use this code on your employer monthly schedules so RSE workers are taxed at the flat rate of 16.7 cents in the dollar for the 2009-10 income year (15 cents PAYE and 1.7 cents ACC earners' levy).

Check your payroll software has the correct PAYE tax rate of 16.7%. If the rate is not 16.7% contact your payroll software provider for help. Don't forget to calculate the correct PAYE. You can use our PAYE calculator by going to "Work it out".

Any questions? Please call us on 0800 377 772.

Are you having difficulty paying your tax?

We recognise the financial pressure many employers are facing in this economic downturn.

So we have some suggestions to help you manage your tax payments, and information on how we can help you. Find out what to do if you are struggling or unable to pay your tax.

Paying your tax in full and on time is still the best option. If you don't think you'll be able to do this, call us on 0800 377 771 as soon as possible to discuss other options.

Personal tax summary (PTS)

It's coming up to the time of year when employees may ask questions about personal tax. Here's how to respond to your employees if they ask you about their PTS in the next few months.

July
Personal tax summaries issued. We'll send a PTS to employees whose only income is from salary and wages, if we think they need an end-of-year tax square-up.

August
Request a personal tax summary. Employees who don't automatically receive a PTS in July and think they may need an end-of-year tax square-up, can check to see if they need to request a PTS.

Free tax seminars and workshops for employers

We hold free tax seminars and workshops around the country for people in business. The seminars cover record keeping, income tax, GST, electronic filing and payments, and deductible expenses. Our workshops include:

GST and income tax	An introduction to business tax responsibilities, including structures, income tax, GST, record keeping and expenses.
Employers and KiwiSaver	For people new to employing staff, this covers keeping wage records, manual and electronic calculations of PAYE and other deductions (eg, student loans, KiwiSaver), completing the Employer monthly schedule (IR348) and Employer deductions (IR345) forms and due dates.
GST workshops	Registration, responsibilities, accounting methods, filing frequency, due dates, payment methods, penalties and interest, keeping a cashbook, how to complete/file a GST return, a GST exercise and online services.

Booking is essential. Find a workshop near you.

Independent earner tax credit (IETC)

In early April we sent all employers a flyer titled Important information for employers when using the 2010 PAYE tables. This flyer explained how to use the 2010 PAYE tables to record the PAYE and student loan repayments for employees who elect the new ME SL tax code for the IETC.

Read Important information for employers when using the 2010 PAYE tables.

You can also use the online PAYE calculators to help you work out an employee's PAYE and student loan repayments under "Work it out".

FBT prescribed interest rate changes

Fringe benefit tax (FBT) prescribed interest rates are used to determine the fringe benefit value of low-interest loans provided to employees. New rates are set periodically and the last change (from 10.90% to 8.05%) applied retrospectively from 1 January 2009.

Once the prescribed interest rate is set, it applies to all future quarters until it is altered. If no new rate is set for the current quarter then the previous quarter's rate applies.

Check the current prescribed interest rates.

Want to save time and money?

When you file your employer monthly schedule (EMS), following these tips will save us having to contact you (which could cause delays or penalties for you).

Start and end dates - you only need to enter a start date when your employee begins employment with you, and a finish date when they end their employment with you. This information affects other entitlements for your employees.
Matching tax code and amounts being deducted - sometimes the correct amount is being deducted but the tax code recorded on the EMS is incorrect. In a few cases the correct tax code shows but the incorrect amount is being deducted, meaning the employee is having too much or too little deducted. Make sure the tax code on the EMS matches the amount of tax or repayments being deducted. If we notice the tax code is incorrect we'll ask you to change it.
IRD numbers - make sure you enter your employee's IRD number on your EMS. If your employee hasn't given you their IRD number, deduct tax at the no-notification rate of 45% plus 1.7% earners' levy until you get their IRD number.
Tax code declaration (IR330) - if your employee gives you a signed IR330 with a new tax code, you must change their tax code to the one on their signed declaration. You'll need to do this even if we've previously asked you to change the code.

Alternatively, you can file your EMS online using ir-File. This is the most accurate and efficient way for you to send us employee information. It's a secure internet-based application. You can:

file your Employer monthly schedules (EMS/IR348)
file your Employer deductions (EDF/IR345) form.

You can also use the KiwiSaver "details form" to file both the KiwiSaver employee details (KS1) and the New employee opt-out request (KS10) forms.

Any employer can register to use ir-File. To find out what it's about, talk to your payroll provider or go to "Services requiring login" where you can register and view an online demonstration.

You can also pay us electronically. Options include automatic payment, direct credit and online banking. For more information read the March 2009 issue of Payroll News.

Alan Quinn
Manager
Customer Insight