Even where payroll software connects directly to Inland Revenue, PAYE errors will still arise, and will need to be corrected.
It is proposed that payroll software which connects directly to Inland Revenue will be able to advise Inland Revenue of error corrections when the employer’s payroll is updated. There are two ways this could be done:
1. the correction could advise what was actually paid and deducted, and what should have been paid and deducted, for each period in which the error occurred; or
2. the correction could simply advise of the changes required to each pay period in which the error occurred.
There is currently no PAYE equivalent of section 113A of the Tax Administration Act 1994 which provides for the correction of minor errors in subsequent periods. The Government is interested in feedback on whether section 113A needs to be extended to cover minor alterations to the tax position employers take when they return PAYE information.
1. If your payroll software could calculate the information required to correct errors and you could use it to send that information to Inland Revenue when you amend your payroll records would that increase or reduce your compliance costs? If you can quantify the effect please do so.
2. Do you prefer one or other of the two options outlined above for the information to be provided when PAYE information is amended?
3. Do you think there is a need for legislation to explicitly provide for the correction of minor errors in a subsequent pay period? If so, at what $ value should the threshold be set?