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Integrate PAYE into payroll software

Should payroll software provide information about new employees to Inland Revenue when the information is entered into the payroll system?

The Government proposes that where an employer uses a payroll system which connects to Inland Revenue's system, information about new employees could be provided when the relevant employee details were first entered into that payroll system.

That would mean the employer could be provided with confirmation of the employee’s IRD number and tax code, and advised of the employee’s KiwiSaver status and deduction rate, and of any additional deductions (for example for child support) required, before the first time the employee was paid. This would eliminate at source errors which now take time to correct, and remove the need for a separate KiwiSaver form.

The payroll system could also be used to advise Inland Revenue of updates to employees’ details, such as changes to their contact details or ceasing employment. This information would also be passed from Inland Revenue to the employee, so they could correct any errors.

Questions

1.  Do you agree with the proposal that employers should be able to use their payroll software to provide relevant employee details to Inland Revenue at the time the employee’s details are entered, changed in, or removed from the payroll system?

2.  Would using payroll software to provide IR with details of new employees before they are first paid and being notified of deductions as set out above, reduce or increase compliance costs? If you can quantify the effect please do so.

3.  Do you support the proposal that Inland Revenue should continue to communicate any change of employee obligations or details to the employee?

Comments

Haydn J
1. Having the payroll system send details of new employees direct to IRD would not save me any time. It may increase my time required, as I don't currently record contact details in my payroll system. I can see that it would save IRD time, in that they would not have to process manual KS1 forms. 2. Having IRD advise me of correct deduction details would not save me any time. It may save IRD time, and prevent some confusion for the employee, but all it would do for me as the tax collector is add another step whereby I have to check the IRD information against that provided by the employee, and then ask the employee to confirm any changes - The IRD information is not always correct.

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8 months ago
Software training contractor
1. Yes. If there is a mistake, you have immediate flagging of it so you can sort it then and there. 2. Reduce it as there is prompt feedback on data accuracy. 3. Yes, they need to be informed of what is happening to their status etc even if they are not interested

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8 months ago
Joyce Glennie
I would prefer to keep this all in the capable hands of our accountant.

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8 months ago
Lyn
I am not sure what information about employees the IRD requires - other than that currently included in the EMS... I would not think it is viable to send information before the employee starts... It is most helpful if the IRD sends applicable information to the employee as well as the employer. We have had staff leave because of a tax code change - having maintained they can override the IRD and tell us what code they should be on! It would be helpful to find out before employing a staff member if they need to pay child support as it seems to us a lot of employees change jobs and are happy until their obligations catch up with them and an IRD letter is sent to the new employer demanding child support deductions. This diminishes in the employee income and this reflects in their desire to do the job!!! ( I guess this information would never be available because of the privacy act, but it needs to be - somehow)

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8 months ago
Toby Gillman
I agree with the idea of payroll software automatically sending PAYE info to the IRD. I would go a step further: the IRD could have some form of payroll software hosted on its website. This would simplify the (more and more complicated) tax calculations for small businesses, improve accuracy and compliance, and help make employers and taxpayers feel they are actually getting "value for money" from tke IRD.

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8 months ago
Delwyn Shaw
We generally only add new employees to the payroll software when we are about to pay them so I can't see the benefit in the info being sent to IRD at that time. Including starts and stops on the EMS as currently happens is fine. Yes, IRD should communicate any changes to the employee so they know what is happening. Otherwise the employer ends up having to pass on the instructions they've received from IRD (e.g. tax code change).

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8 months ago
Ian McKee
Assumes you use payroll software. Small companies may not. We don't and don't want to have to.

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8 months ago
Jenette K
No, enough to do, keep it simple! KIS

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8 months ago
Suzanne Ashton
1. We'd prefer relevant employee details were sent to Inland Revenue as part of the monthly PAYE schedule process and yes via our payroll software is ideal. 2. There is enough things to do when a new employee starts, we'd rather not add in another step. 3. Yes, Inland Revenue should continue to communicate any change of employee obligations or details to the employee.

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8 months ago
Fiona Palmer
1. Great idea. 2. Very helpful to have that information before the employee starts, really annoying when those letters start rolling in from IRD about child support and Tax Codes etc. and then at least you can confirm it with the employee. 3. Of course, the employee should be fully informed regarding anything to do with their obligations. In my experience, although we have to administer the process it's the employee who has to speak to the IRD if there are any issues.

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8 months ago
Common Sense
I Don't agree with this proposal . Once a month with the IR 348 should be enough to advise IRD of any information re employees. Also, what is being supplied currently I consider to be more than adequate. This just is an addition to compliance costs for employers particularly small ones and something they can well do without.

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8 months ago
Bernadette
It would be good to be able to provide this information through the payroll system, but wouldn't work for everyone. I know that I don't tend to enter a new employee into the system until the first time I pay them... but then again, if this was the way to get the info I needed for their wages (ie child support deductions) then I could just do it in there up front and get the info that way. It would save an extra phone call... but not really a big deal. I imagine it would make a big difference for larger workforces though... No issue with info being provided to employees.

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8 months ago
Angus Ogilvie
I support this for those SMEs that operate a payroll system. However, it should be noted that a large minority still do not operate any payroll system and so any mandatory reporting should be avoided. My preference is that this is voluntary.

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5 months ago
Noel Reid
Could be beneficial, but is IR aware that, in some large organisations, Payroll are the last to be advised of new starts; this is a cause of some out-of-cycle payruns.

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5 months ago
Chris Mar
While overall in support of these measures, timing will need to be considered to make sure any system works well - especially in respect to individuals that may taking up employment immediately after ending another. New employees can be entered into payroll software anytime from before they start to more typically just before they get paid for the first time. If the employee has not received their final pay from one employer before starting with the next then IR may not be in a position to provide the correct information eg tax code that should be used. The system would also need to cater for employers that pay some staff very intermittently. These employees are not marked as having ceased employment but may appear at another employer. Often employers are reluctant to terminate employees off their books (temporary employment companies are typical of this). So in summary, the theory of both sending and receiving information to/from IR when an employee starts to get more accurate information loaded at source is a good idea but may be limited in practise.

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5 months ago
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