Compliance focus 2009-10: Community and business segments

Employers

Our compliance approach

Employers play a central role in our tax system. They collect income tax, student loan repayments, child support payments and KiwiSaver contributions from employees and pass them on to us. Employers may also have to pay FBT (fringe benefit tax).

Employers are concerned about compliance costs. For example, KiwiSaver has placed additional responsibilities on them.

We know tax is only one small part of employers' day-to-day responsibilities. We want to make meeting tax obligations as easy as possible so employers can focus on effectively running and growing their business.

Our online services make it easy for employers to comply, reducing the time spent on tax obligations. For example, employers can:

• register
• use our online calculators to work out deductions from employees' wages for PAYE, KiwiSaver and student loan payments
• work out the PAYE on cash payments
• calculate KiwiSaver employer contributions
• electronically file employer monthly schedules
• make online payments using our ir-File service.

We issue a regular payroll newsletter giving information and updates for employers and their advisors.

Areas of focus

e-Filing employer monthly schedules

Employer monthly schedules (EMS) filed by employers provide us with PAYE information about their employees, including child support payments, KiwiSaver contributions and student loan repayments. This information also helps us calculate working for families tax credit and paid parental leave entitlements.

Most employers file their EMS on time, although many have been slow to take up e-filing opportunities.

We are encouraging all employers to electronically file their EMS using our online service, ir-File. This system is secure, accurate and reduces the time it takes to complete and file schedules.

By law, all employers who have annual PAYE of more than $100,000 are required to file using ir-File.

What we will be doing

We will be:

• contacting employers who are not filing electronically but should be. We will help them register for ir-File for the first time and demonstrate how to use it
• holding local ir-File seminars and workshops and having community relationship advisors available
• working closely with payroll software providers to make the employer monthly schedule easier to file and faster to process.

Employer registration

There are some employers who should be registered with us but are not. In some cases we have identified employers who are not registered through their employees registering for KiwiSaver.

What we will be doing

We will be:

• reviewing the employer/employee registration process
• identifying employers who are not registered, or are not correctly registered with us as an employer. We will respond to compliance issues with education and enforcement activities.

KiwiSaver

KiwiSaver is a voluntary savings scheme, mainly work-based, to help New Zealanders with their long-term retirement saving. It began in July 2007 and by the end of February 2009, more than 1 million people have joined. More than $2 billion in KiwiSaver contributions (employee, employer and government) has been passed to KiwiSaver providers.

Employers play an important role in the KiwiSaver scheme. They provide us with information about employees enrolling, deduct KiwiSaver contributions and make compulsory employer contributions. Employers have also provided information about KiwiSaver to their employees.

As with any new scheme, there has been a period of learning how it will work. Research shows that:

• business size affects employers' KiwiSaver costs - the more employees, the greater the time and financial costs involved
• employers with only a few staff are less likely to understand their obligations.

What we will be doing

We will be clearly setting out what employers need to do by:

• contacting them to outline changes to the scheme
• ensuring our printed and online information is up-to-date and relevant and our people have the most recent information to help with questions
• regularly including information in newsletters, industry publications and media releases
• providing community relationship advisors to inform employers of their obligations and assist them to comply.

We will continue to work with:

• scheme providers who have the direct relationship with KiwiSaver members
• the Retirement Commission to develop a coordinated approach to communications about retirement savings.

Over the next four years, working with the Ministry of Economic Development and Housing New Zealand Corporation, we will assess:

• the implementation and delivery of KiwiSaver to inform the scheme's ongoing administration
• the uptake of KiwiSaver, to understand the profile of members and if the various features of KiwiSaver are achieving their intended outcomes
• the impact of KiwiSaver on individuals' savings habits to determine if KiwiSaver has achieved its policy objectives
• the impact of KiwiSaver on the superannuation industry and broader financial sector.

 

 

Date published: 09 Jun 2009

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