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Tax Administration

There are two options for managing your payroll-related tax, either we manage your tax returns, remittances, payments etc. with Inland Revenue, or we provide reports so that you can do it yourself. (Obviously, we recommend that you let us manage your payroll-related tax).

If we are managing your payroll-related tax, there is very little that you have to do - apart from ensuring that all of your payroll payments are processed through us so we have all the necessary information to complete your returns.

We will automatically calculate the correct deductions for these tax types:-

Sometimes special calculations are required, to cater for one-off situations and these are catered for too, e.g.:-

Select an item to find out more about it:-

Superannuation Subsidy
Tax Opening Balances
Tax Overpayment
Tax Remittance
Tax Return

Superannuation Subsidy

Employer Superannuation Contributions (ESC) are subject to Withholding Tax Payments (ESCT). Inland Revenue provide for several options when calculating ESCT

  1. ESCT is deducted from the calculated Subsidy.
  2. The Subsidy is "Grossed Up" to determine ESCT.
  3. A person can elect to have their subsidy treated as salary and taxed at their normal tax rate. Note: This may affect their family assistance, child support and student loans.
  4. At the discretion of the employer, the rate can be based on the person's earnings in the previous tax year.
    EarningsESCT
    less than $16,80012.5%
    $16,800 - $57,60021%
    over $57,600 33%

The first three options can be selected when setting up a deduction for a Superannuation Subsidy, while the final option can be entered on the person's Personal Details page.

ESCT Calculations

Your Payroll Control Report clearly shows the actual calculations used in each payroll. The Personal Tax Summary also clearly show the figures for each person (for a tax year).

  1. ESCT is usually deducted at the rate of 33 cents in the dollar.
  2. The Gross Up Calculation divides the subsidy by 0.67 before calculating ESCT.
  3. When taxing subsidy as salary, PAYE is calculated for the persons pay (excluding subsidy), and then calculated again on their total pay (including subsidy). The difference between these two values is the extra PAYE for ESC.

Superable Earnings

Superable Earnings include these elements:-

Tax Opening Balances

You may need to load some Opening Balances of Tax figures for the current month. This will ensure that your first return contains all the information required by Inland Revenue. Your Opening Balances will be any payments that you have made that are not recorded in iPayroll®.

To record Opening Balances, follow the steps in your Opening Balances page. Please ensure that only one remittance is sent to Inland Revenue when you transfer to our system. (Contact us if you are unsure about this point).

For example, here is a sample Opening Balances page:

Load any Opening Balances for the current month - to ensure that your first Monthly Schedule contains all the information required by Inland Revenue.

Your Opening Balances are any payments that you have made that are not recorded in iPayroll.
1.  Enter Opening Balances Options
Open Bal. Date: Last Pay Date in previous system
 
Open Bal. Date determines irFile period. Use earlier date if o/bals NOT required in Mar 2002 irFile.
  Opening Tax paid to: All to iPayroll - Recommended
    All or some to Inland Revenue
 
2.  If you have an existing ir-File, select it then press the 'Upload ir-File' button.
  Select ir-File:
 
3.  Select a Person to change their Opening Balances.
  Employee deduction details Start/finish dates Gross earnings Not liable for Earner Premium (ACC) Extra pay taxed at low rate PAYE / Withholding tax Child Support Student Loan KiwiSaver KiwiSaver employer contributions
  Matthews Christine (
026980658 M SL		 13-Jun-2001
 $0.00 $0.00 Not Ticked $0.00 $0.00 $0.00 $0.00 $0.00
  Matthews John Willia
026980658 M		 13-Jun-2001
 $0.00 $0.00 Not Ticked $0.00 $0.00 $0.00 $0.00 $0.00
  Smith Fred
00-000-000 ND		 13-Jun-2001
13-Jun-2001		 $0.00 $0.00 Not Ticked $0.00 $0.00 $0.00 $0.00 $0.00

4.  Double Check the figures on your Monthly Schedule.
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Tips

  1. Inland Revenue requires you to send one remittance and return to them each period. If you have made any payments from your old payroll system (regardless of whether it is computer based or not), you need to load those balances here so that we have complete records.
  2. Enter the tax opening balance options at Step   1..
  3. If your existing payroll system creates ir-Files, upload that file at Step    2..
  4. Alternatively, just skip the second step and enter your Opening Balances into the form at Step    3..

Tax Overpayment

If a person has been overpaid, we will process the necessary tax adjustments.

First the persons pay must be corrected. Enter the necessary timesheet transactions to calculate the correct pay. This will normally involve entering negative quantities on a persons timesheet.

For example, if a person has been paid an extra 3 hours overtime (T1.5) in their last pay, enter -3.00 T1.5 on their timesheet. This will perform all the necessary calculations to update the persons Pay, Year to Date totals and Tax information.

Note: This will not necessarily recover the money owed by the person. See Overpayments and Recovery for more information.

If after this recovery the person still has tax to pay to Inland Revenue at the end of the month, your Monthly Schedule to Inland Revenue will simply be adjusted.

Negative Adjustments

However, if the person ends up in a negative situation (i.e. their tax to be recovered is greater than what is owed for them this month), an adjustment form is required. This is because Inland Revenue will not accept negative values on the Monthly Schedule or ir-File. In this case, details for an IR344 - Employer Monthly Amendments Form - will be displayed with the Monthly Schedule.

If we manage your tax for you, we will send the necessary adjustments to Inland Revenue. (We may need to contact you to confirm the details of the recovery). If you manage your own tax, you must complete an IR 344 form from Inland Revenue, based on information we supply. Further instructions will be displayed with the adjustment form.

Tax Remittance

Inland Revenue requires employers to send tax payments and remittances to them at different frequencies, depending on the size of your organisation.

If we manage your tax, we will do this for you.

If you manage your own tax, you must complete these tasks - follow the instructions on your Submit Remittance page.

Those pages contain full instructions. You can also refer to your Tax Options for your set up details.

Tax Return

Inland Revenue requires employers to send them a monthly return, either via a printed schedule or through their ir-File website.

If we manage your tax, we will do this for you.

If you manage your own tax, you must complete this task - follow the instructions on your Monthly Schedule page

That page contains full instructions. You can also refer to your Tax Options for your set up details.

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