How to stay on top of PAYE
Having trouble staying on top of your PAYE (Pay As You Earn) obligations? Technology could hold the key.
As an employer, you’re responsible for calculating and deducting income tax and ACC earners’ levy from your employees’ salary or wages each pay period.
You then need to send those deductions to the Inland Revenue (IR) each month on their behalf.
The amount of PAYE you deduct depends on the employee’s tax code, how much they earn and whether they require additional deductions like child support, student loan repayments, KiwiSaver contributions, court fines etc.
The PAYE amounts to be withheld from salary and wage payments can be determined by using IR’s online calculators or deduction tables as well as any IR directives.
You then need to lodge two PAYE returns to the IR:
- Employer Deductions (IR345) to record and pay deductions from your employees pay, and
- Employer Monthly Schedule (IR348) for the pay details to your employees.
Most employer returns and payments need to be filed by the 20th of the following month.
Different rules may apply depending on whether you deducted more or less than $500,000 from your employees in the last financial year.
Check out our tax time planner for when to pay your deductions.
In short, it can be pretty complicated to work out manually – but luckily technology is here to help.
Let’s get digital
Cloud-based payroll software already helps with tax and payroll compliance by staying up to date with IR changes in real time so you never have to worry about updating ACC Levies, Student Loan and KiwiSaver rates.
It also helps employers by making sure payroll calculations are correct, tracking all annual and sick leave entitlements and securely storing records to meet their record keeping obligations.
IR has been hard at work trying to make tax easier for businesses by facilitating digital services from accounting and payroll software.
For example, last year IR started accepting digital signatures on forms lodged and launched eGST. MYOB became the first company to offer the ability to file GST payments electronically directly from the user’s software.
MYOB has worked with IR on both measures, as NZ Business Monitor survey findings have consistently found that NZ businesses just want tax compliance to be easier.
Unsurprisingly, they don’t want to fill out forms in triplicate.
Next IR are proposing Payday Reporting. That’s a new digital service where you’ll be able to electronically submit employer schedules directly from your payroll software each payday, instead of on the 20th of the month.
We’re also seeing more and more businesses move their accounting to the cloud to take advantage of all the efficiencies of working online.
So the move to enable PAYE to be processed electronically each payday makes sense.
They expect this service to be available from April 2019, but if you like the sound of automating your PAYE obligations, you don’t have to wait.
You can unlock the power of payroll automation today with MYOB Essentials, our online payroll solution that automates your PAYE payments and monthly IR reporting to save you time and make sure your PAYE obligations are met.
Take the hassle out of tax changes and payroll compliance now and in the future and stay a step head of IR changes with MYOB.