From 1st of April 2019, the payroll process will be getting streamlined for business owners and payroll teams. All businesses who pay employees or contractors will need to switch to Payday Filing.
Why was it introduced:
Payday Filing streamlines the payroll reporting process and provides real-time information to Inland Revenue. This means the government will have a more detailed picture of employee income. The intention is to use this data to improve accuracy in calculating payments for social welfare assistance such as Working for Families Tax Credits and also ensure other payments such as Child Support are correctly calculated.
Changes with Payday Filing:
Employers currently return a Monthly Employer Schedule (EMS) either monthly or twice monthly (depending on annual PAYE payable). From 1 April 2019, this changes to:
- All employers need to file Employment Information (EI) after each pay run. The EI replaces the EMS form (IR348) that you usually submit.
- This information needs to be filed within two working days of the payment being made to employers
Note: once Payday Filing becomes live, employers will no longer have to file an Employer Deduction Form (IR345).
Previously an employer was only required to file electronically if their PAYE and ESCT deductions were $100,000 or more in the previous year. This threshold is now $50,000 – i.e. an employer is required to file electronically if their PAYE and ESCT deductions were $50,000 or more in the previous year.
- Employee Information:
Employers will now need to provide new and departing employees’ address details, as well as their date of birth in each pay run.
- PAYE Payment Date:
Even though employers are now filing after each pay run, payment dates remain the same (only once per month).
I'm using Payroll software, what should I do now?
Nexia New Zealand has been in touch with the following payroll providers and is pleased to be able to provide the following update ahead of the 1st of April 2019 deadline.
Xero has now confirmed the date that Xero Payroll will be ready for Payday Filing. From 18 March 2019, Xero Payroll users will be able to establish the connection between Xero Payroll and Inland Revenue. Once the connection is established, Payday Filing from Xero will automatically switch over from payments made after 1 April 2019. After 18 March you’ll be prompted via a banner within Xero Payroll to establish the one-off connection.
From a payroll process point of view, there is very little change from how the pay run is currently processed in Xero. Once you ‘post’ a pay-run in Xero Payroll, it will automatically be filed with Inland Revenue in the background.
Xero has confirmed that you will be required to have a myIR login to Inland Revenue to allow the files to be transferred. If you do not already have a myIR login setup for your business, you can register here.
Please remember, the EMS and EDF forms for March 2019 due to be filed by 20 April 2019 will still have to be actioned using the old system (upload the files via ir-File).
MYOB have confirmed that Payday Filing will be available this week for MYOB Ace Payroll, MYOB IMS Payroll, MYOB Payroll, and MYOB Essentials. For instructions on how to update your software, see below. MYOB have confirmed that you will be required to have a myIR login to allow the files to be transferred to Inland Revenue. If you do not already have a myIR login setup for your business, you can register here.
MYOB Ace Payroll – click here
MYOB IMS Payroll – click here
MYOB Payroll – click here
MYOB Essentials will be updated automatically today. You’ll be able to find it in the ‘Payroll’ menu from the main navigation.
We have confirmed with iPayroll that they have already released the functionality for Payday Filing requirements. iPayroll is set up to be your payroll intermediary which means they are responsible for filing all required employee information with Inland Revenue, along with making payment for employer deductions (PAYE) on your behalf.
There is nothing further that you need to do to comply with the Payday Filing.
Even if you consider your business to be too small for payroll software, you will still be affected by Payday Filing as an employer. We would strongly recommend using some form of payroll software to meet your compliance requirements as an employer. There are a wide variety of payroll packages available for employers to make the transition to Payday Filing as smooth as possible.
If you would like to discuss Payday Filing, please contact our Payroll Specialist, Laura Fairbrass, on 03 379 0829 or firstname.lastname@example.org