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Integrate PAYE into payroll software

Should payroll software be used to send information about PAYE income and deductions to Inland Revenue when staff are paid?

At the moment employers are required to provide PAYE information on a monthly basis, regardless of their pay cycle. When PAYE compliance is facilitated by payroll software, this information could be provided on a pay period basis, rather than monthly. This would eliminate the current need for employers to aggregate information from each pay cycle in each month, which creates additional work and an opportunity for error. Submission of information on a pay period basis would eliminate the need to file an employee monthly schedule.

For employers already using payroll software and “file transfer” to submit their employer monthly schedule information digital submission of data from within a payroll system at the time the payroll is finalised, would eliminate the steps of saving the file of PAYE information, logging into ir-File through my IR and sending the employer monthly schedule to Inland Revenue.

Question

If your payroll software could be used to send payroll information to Inland Revenue at the time staff are paid would it increase or reduce your compliance costs?  If you can quantify the effect please do so.

Comments

Courtney
The cost stacks up adding payroll software cost to a small business. Should IRD create a software that is free and used to streamline payroll including automated employee information, I'd be very happy! We could spend more on other specialised software to run our business and make it more successful.

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8 months ago
Jamie Falloon
I dont think that the system should be automatic but it should be able to be direct and not have to go through the process of saving the EMS and EDF files from payroll system and then transfering them through the myird website.

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8 months ago
Julie Thorpe
I think that this wuld increase compliance costs. It would also remove the internal process of checking for errors. If something was misentered in the pay run, for example, it can be corrected by then month end return to the IRD. Commonly, businesses perfrom reconciliations on a month end basis, to tie in with their management reporting, not after each payroll. Sending information to the IRD automatically after each pay run, thereofre would increase the possibility for error and also compliance.

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8 months ago
Barry Arbuckle
Anything that reduces time and increases accuracy has got to be beneficial to employers :-)

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8 months ago
Jen H
The proposals will increase time required not reduce it

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8 months ago
Stephen Hunter
I use SmartPayroll to file my PAYE. Very fast, and very helpful support. All the forms are filed automatically, and it takes 2 minutes to do a pay. Fantastic, such a relief, so my answers it yes , most definitely.

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8 months ago
peter Warwick
This will require high speed internet costing companies more, and a risk of data corruption. this may work for some companies but not others. it must remain optional.

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8 months ago
Anita
I dont have a problem with electronic forms of Paye etc, but do believe it should still be an option, especially for small businesses. As for paying PAYE at same time as wages, this would create extra work, which would not be so beneficial to any business.

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8 months ago
Ian McKee
Using payroll software to help with PAYE assumes that companies are using payroll software. Our is not - and we do it manually and that works fine. If you force us to use software - it is adding cost to our business. I am opposed to this.

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8 months ago
Rosemary Cathcart
I would be strongly opposed to this as a compulsory measure. I run a very small business, I'm not a mathematician and I'm not a computer whiz. I have tried to use MYOB in a previous position and found it beyond my skills, and I don't need it. I'm much more comfortable with good old-fashioned pen and paper accountancy which I understand and can do.

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8 months ago
Kendra Coulter
Who is going to pay for the software to run this we are a very small business and we have looked into software packages and there on going yearly costs and have worked out it would be uneconomical for us. The PAYE is not the issue for me but the kiwi saver split has been. It needs to be automated at IRD end so a percentage is put in and the split remembered for each employee save me calculating it all manually this is were I have had errors that have been very time consuming to fix

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8 months ago
Bryce Coulter
My existing payroll software already automatically sends monthly data to the IRD. If it was tweaked in the software to send the info to IRD each payday rather than a monthly summary it would have no impact on my own compliance costs unless the software company chose to increase their monthly subscription cost as a result

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8 months ago
Kim
I definitely don't agree with paying / sending Payroll deductions to IRD at the time of paying employees - most people pay fortnightly and this move will mean more work and increased compliance costs to do this fortnightly rather than the current monthly. I file our returns online and this works well - allowing my payroll software to send data to IRD won't be any more beneficial and in fact may make it more complicated as every software is different.. stick to what is happening currently, it works well so why change it?

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8 months ago
Alex McGrath
Integration would be great as saves time - so saves money. I do admin for my husband's small business and work my own job (household to run, kids etc etc) - so any opportunities to save time are great news! In saying that MyIR is pretty good and monthly PAYE submission isn't too time consuming a job.

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8 months ago
Carolyn
Hi, we are a very small business with less than 5 staff. We do not use any payroll software (we do it manually) and for you to force us to purchase and run a system for the purpose of assisting you in your tax gathering will be both costly to us as well as labour intensive as we try to learn a new system with absolutely no benefit to us. Please leave the existing option available to us small businesses. Regards Carolyn

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8 months ago
Maree Coley
This would increase costs for us as we are a small business. We pay only one staff member, therefore we would be forced to buy unnecessary software.

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8 months ago
Catherine Van Groen
I do not use payrol software so this is no help to me. What would be of more use to me is when I log onto myIRonline it shows ALL of the things I need to immediately do, not just the GST return. Whatever documents that are due to be filed by me need to be in the "things to do" list, ie GST, PAYE, RWT on Interest or whatever other obligations that are pending. All of these, need to be able to be done online too.

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8 months ago
Greg
The proposed process would reduce costs. Eliminating the steps of saving the file of PAYE information, logging into ir-File through my IR and sending the employer monthly schedule to Inland Revenue. Probably a 5-10min process in many instances.

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8 months ago
Carmel
I think that sending the infirmation at the time employees are paid would make compliance simplier and make the information that the IRD holds on people accurate and timely.

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8 months ago
Anthea Troughton
I would like the IRD to provide the PAYE software online, not unlike the tax calculators they have there now, the GST calculator/return works really well why not a wages calculator?

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8 months ago
Sue
Yes! It would make it much simpler for me. Small business using MYOB essentials.

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8 months ago
Tiffany Lamb
Yes, it would make things a lot easier if all formal requirements are completed at the same time as I process each fortnights payroll.

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8 months ago
Angela
I believe that this would simplify the process a lot. But it will make more costs to begin with for employers as they will have to buy the updated software from whatever they use. I think you still need to keep the same options available as now, but add this as an additional option.

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8 months ago
brendan kelly
I use I-payroll cloud based software for our 14 employees. It a paid subscription service, linked to inland revenue and Xero... and I would not consider doing anything less! Compliance cost is that of completing the weekly and monthly payroll hours in the system, a 20 minute job each week.

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8 months ago
TF
I think that if there were more options it would work better for everyone. At the moment IRD state what they want and irrelevant of your system you have to comply or you get penalised. If you had options for filing returns seperate to payment and each chose what worked best for them it would be better all round. Filing Options could be 1) File Weekly vs Monthly vs Bi Monthly, 2) File Manually vs Electronically via File Transfer vs Electronically via software. Same with Payment Options Weekly vs Monthly vs Bi Monthly. Whenever we ring IRD we are told most settings, penalties and letters are all 'electronic' so once each company makes their choice it could be loaded in and IRDs 'electronic system' can monitor it. Obviously each company would need to follow through on their choice of type and regularity. A lot of accounting software will probably come to the party to incorporate the options which would make things simpler all round. But if Companies are still using manual or paper methods this can be an option made available by IRD. Ultimately if IRD was more flexible and willing to give more options across all returns and payments, I think it would save them time and money as well.

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8 months ago
Jenette K
We like to keep our software as simple and as accurate as possible. While it may appear to save time if software and IRD returns were linked this could compromise our computer internet safety, and security of details etc. There is enough to watch out for going wrong now with clouds etc. For us it takes a short time really to transfer the print out details from payroll and to add these details to the online employer page.

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8 months ago
Tim wilson
We are users of cashmanager where all wage related calculations are done. I'm of the view that I have the information anyway, so filing the paye portion to ird electronically won't have any associated costs. Means no budgeting for employer deductions at the end of the month

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8 months ago
Suzanne Ashton
We currently use SmartPayroll which has streamlined our payroll processing and reporting considerably and it's no longer a hassle when (say) ACC asks for 'this' info or the accountant asks for 'that' info or employees require income statements for mortgages etc. Our IR348's are now filed automatically each month with the next step being auto filing of our PAYE IR345. The funds for this are set aside each payrun and then sent across to IRD along with the monthly filing. If the funds were held in our bank account or we received some benefit from paying IRD (early) we would have transitioned to this sooner. This cannot happen soon enough for me. One less job to do on 20th/month. We haven't had any problems so far with the auto filing and the time it has saved us can be much better spent on growing the business.

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8 months ago
Susan Moyle
Hi If this was done we would have weekly submissions - we would also have to pay more for full payroll software, rather than at present using it just to calculate the payments for us. Who would be at fault if the data did not get sent to IRD (say due to internet outages or overload of IRD system)? What if you realised that you had filed incorrectly after the data had already gone to IRD? Would the payroll system at the employers end need to be sophistocated enough to allow correction and then send this through, also how would IRD's systems cope with this? I think that there are a lot of things that could go wrong - needs to be really carefully thought out and flagged to payroll software makers and employers (many firms don't cope with change even when flagged well in advance e.g. Wilson Parking with new notes not being recognised)

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8 months ago
Jewel Matheson
No I don't think they should use payroll accounting software to make PAYE or WT payments to IRD. We don't use Payroll software so it would be a nuisance for me to change the way we do things. I'm quite happy with the current system, especially for Withholding Tax payments.

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8 months ago
Greg Angell
I agree that information sharing through the likes of Xero will reduce complexity, however what IRD need to understand is the cash flow implications of paying PAYE at the same time as wages. We pay wages weekly but are paid monthly (assumes debtors pay on time which is 50/50) so having cash available to pay weekly wages is a skill for low margin businesses such as mine, adding PAYE weekly would shift the balance and likely we'd need to change to monthly wages to minimise the cash flow problems this would introduce. Not a good outcome for staff and counter productive. You'll get the information you need to collect but you cant deduct weekly without a change of financial payment system in business.

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8 months ago
Jewel
As a small business I am quite happy with the current system. We do not have payroll software and do not see a need for it with only 2 staff. Leave things as they are. I don't see any benefit to our business by enforcing this. Make it optional perhaps.

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8 months ago
Falah
Any introduces software should not be compulsory

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8 months ago
Natalie King
As a small business these changes would increase not only our costs but also our administration time. We do not (and will never require) accounting software, meaning we will have to pay for new software, pay for training and put more hours in to something we usually only do monthly, but will now need to occur weekly. As dairy farmers we're constantly being hit with new compliance costs - not many dairy farmers will be happy with these compliance costs leaking in to administration. Do we take the time out of our already busy days for this? Hire new staff/increase hours? Compromise animal health due to increasing costs? Pay the accountant more for something which we used to be able to do ourselves? I can see the benefits for larger scale businesses. But for small businesses the proposed changes are more of a headache. Maybe these changes should be voluntary? Or should they be specifically for businesses with a larger number of employees?

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8 months ago
Amandeep Singh
Small businesses should not be forced to use payroll software. It would certainly add to my compliance costs.

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8 months ago
Catherine Solari
It slightly increases our costs on the face of things but once you calculate how much time is spent on manually meeting your PAYE obligations it works out so much cheaper.

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8 months ago
MMustafaK
change is good but not at employers' cost if government is happy to ease the process for them self then would be appropriate to provide the application to user for free. small business owners and new comers are already struggling with basic budgeting to roll the money they earn

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8 months ago
Bronwyn Stewart
We are a new very small business (2 people) so I don't use a payroll system as cost to much each month. if the govt had a free payroll for businesses like us then i would use it and then I be happy if it ingretated with the Employers deduction rather having to double handle and making sure its done before the 20th every month.

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8 months ago
Dave Tyler
I carry out the payroll function for 2 separate firms. The first has a fully integrated payroll package and filing PAYE returns is not a problem at all. All I do is push a button and forms are downloaded to myIR site. We pay employees fortnightly and aligning payments to IRD on the same basis would be of no additional work. The second firm only has One employee and operates a manual recording system. Filing, and paying, PAYE more than once a month would definitely create extra work.

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8 months ago
Fiona Palmer
I'd like to have the choice. I can see the pros and cons of paying PAYE straight away. Firstly, you always need to make sure the money is there at the end of the month to pay PAYE, secondly it's nice being able to earn a little bit of interest on it while it's sitting there. However, if you pay every week, then you know it's done and you don't have a tax burden sitting over the top of you all month. It would be really helpful if we could send the information directly from our payroll system. I don't think our system is likely to be able to do that though so I would still like the choice to be able to send it via IR File. I think it would be helpful if you could choose whether you file and pay weekly, fortnightly or monthly.

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8 months ago
Andrea
Of employers who file monthly (some large employers already file twice a month) many will already file electronically (using the IRD MyIR) even if they have a paper based recording system. There are still "computer phobes" among us who will never want to use a computer, but I expect that the number will continue to drop. I think for many employers with good payroll software there is no problem in filing information as the payroll is done - and I have no doubt that software companies would be rapidly updating their software to ensure that this could happen. If it means "pushing a button" to send to IRD (rather than the current download and upload process) it sounds very sensible to me. We currently file client GST returns and tax returns directly through our software - there seems no reason that PAYE and related taxes should not be done this way as well. I have not yet seen a question about paying at that time as well. Maybe the payment process has been overlooked or I have not come to it yet? This should not be compulsory however.

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8 months ago
Douglas Banks
Small businesses do not necessarily use 3rd party software for payroll. Hence no electronic interface will work. The reduction in the threshold for electronic filing of PAYE information, from $100,000, suffers the same problem - how are business with a small number of employees going to easily interface with IRD. The threshold should be based on number of employees, say 5, rather than payroll amount.

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8 months ago
Lisa
Re payroll system integration: we don't use a payroll system and would balk at the expense if required to do more than we do currently (complete DED forms and make payments online).

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8 months ago
Dave Johnston
We use xero payroll, and I find that the file transfer function on the website works well for me (5 employees). Would use the change to an edi format if available, but not life changing. Would be against filing weekly, as this to me implies weekly payments which impacts my cash flow.

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8 months ago
Alan Willoughby
Re possibility of accounting software being used to submit GST returns and possibility of paying GST when staff are paid - as an option yes, as a compulsory action definitely not. My 'accounting' software is Excel and I have no staff so don't pay them. This would place far more owrk on sole traders and very small businesses such as ours.

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8 months ago
Barb
We are a small business. It would require a lot of extra work for us as we don't use payroll software. We find the current system works well.

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8 months ago
Trish
Working with Novopay, I know how many mistakes are made in payroll runs - not all of them Novopay's fault. For that reason I would NOT support the information going direct from the pay run.

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8 months ago
Noel Reid
Trish You're right "on the button"; Payroll Adjustments could well be "the elephant in the room" in terms of the "file when you pay" concept. Yours would be the largest payroll in the country; as you note, there's a multitude of reasons for them. I understand even small payrolls paying employees whose pay can vary payday-to-payday, also face adjustment re-works from time to time.

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5 months ago
Jon Eriksen
IRD could provide interfaces (API or similar) that payroll software companies could enhance their systems so that PAYE and GST returns, once finalized, are electronically sent to IRD. IRD could also provide a formatted spreadsheet that small businesses could use to load and finalise return data and that spreadsheet could then be emailed to IRD and the email/spreadsheet/csv file uploaded. I've done a lot of work on electronic interfaces between companies and in my opinion if IRD were to do anything more than the above it would become too structured, cumbersome and expensive and would only be used by a small number of companies.

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8 months ago
Karen McMillan
I don't support the weekly paying of PAYE. A lot of small businesses struggle in down times such as off season in tourist and rural areas etc. Monthly payments help with cashflow and will put pressure on these businesses paying weekly. There is the addition of compliance costs, not a lot but it all adds up.

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8 months ago
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