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Implementing the change for PAYE Information

What should the threshold be for electronic filing?

At present, employers with more than $100,000 of annual PAYE and Employer Superannuation Contribution Tax (ESCT) must file their returns electronically. This rule dates from 1999. Since that date, the use of electronic technology has increased dramatically. 2012 research found that 96% businesses with more than 5 employees have access to the internet. More than 60% of employers who are below the threshold for filing PAYE information electronically nevertheless choose to do so.

The Government proposes to reduce the threshold from $100,000 annual PAYE and ESCT deductions to $50,000. This would require employers with more than ten full time employees on the minimum wage, or more than four full timers on the average wage, to file electronically.  A process for obtaining an exemption would remain for those unable to access digital services.

The current threshold is set by legislation – given the speed of change of digital technology, greater flexibility to change is proposed. The threshold could be changed either at the Commissioner’s discretion, or by regulation made by Order in Council which would therefore be subject to parliamentary scrutiny.

A process for obtaining an exemption would remain, it would focus on whether the employer is able to access digital services.  Inability to access digital services might be defined as an absence of possible access because no internet services exist in that area or it might be that an employer does not already have a device that they connect to the internet for business/organisational purposes.

Questions

1. Provided a straightforward internet portal exists do you agree that employers with more than $50,000 per annum of PAYE and ESCT obligations should be required to file PAYE information electronically? 

2.  If you believe that the threshold for electronic filing should be based on something other than the value of PAYE and ESCT deductions please describe how the alternative would work and where you think the threshold should be?

3.  Are there factors, other than inability to access digital services, which should be grounds for an exemption from a requirement to file PAYE information electronically?

4.  How should "inability to access digital services" be defined for the purposes of an exemption to any requirement to file PAYE information electronically?

5.  Do you think there should be a more flexible framework under which changes to the threshold for electronic filing are considered in future?  Which of the options outlined above do you prefer (by Commissioner of Inland Revenue discretion or regulation made by Order of Council)?

Comments

David Williamson
It should remain at $100k. This was set some years ago and wage increases have eroded this anyway. Some businesses still prefer manual systems to computer software.

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8 months ago
Haydn J
No, I don't think the level should be lowered. 4 full time employees on the average wage does not constitute a large business. Small businesses should not be forced into electronic filing. It would add to my compliance costs. At the moment I can print 2 forms from my payroll system, sign them and post them. simple and easy. I don't want to have to type the information into an on-line portal, and I don't want to have to change my payroll system to one that has an automatic interface. The option is there for them to use it if they want to , but is should not be compulsory.

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8 months ago
Software training contractor
1. Yes. 2. No 3. Computer illiteracy. Some folk just don't like technology, we'll have to suck it up for another 20 years or so. 4. Umm, if there are persistent PEBCAK errors you'll know. 5. Order of council. That way there may just be a little bit less political temptation to fiddle.

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8 months ago
Chris Fitzgerald
Smaller companies don't always use payroll software, if everyone is salaried they just set up automatic payments then once a month do a manual return. If they are using payroll software but that software will not do the filing for them, it should be the employer's choice whether they complete a form on-line or post a printed copy. Forcing them to use the electronic system if they don't want to is just bullying.

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8 months ago
Lyn
Is it necessary to have a 'payroll system' to file electronically? Is it practical to have the same manual form available on the IRD website for people to access and fill in? Our payroll system is so simple I cannot understand why anyone - even with one employee - would not use it. It is not "in the cloud" - we are in total control, and it is very user friendly. I also find it hard to believe there is anyone without a computer today. It is certainly an advantage to IRD and employers to be able to file electronically. We all have the right to remain in control of our own systems.

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8 months ago
michele hunt
Retain non digital filing option for certain groups, there are people without access to computers still! Payroll should not be compulsory for filing to happen Threshold should stay the same

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8 months ago
Chris Peace
1. Yes, provided it was not reliant on the IRD system. Commercial software companies must compete to give good service whereas IRD doesn't. It can get away with design that would be unacceptable in the private sector.

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8 months ago
Suzanne Ashton
1&2. It should be required to file ALL PAYE information electronically provided a straightforward internet portal exists (which it does, however the link/pathway to those online forms will need to be much more easily accessible). It's time to move with the times and we'll all benefit from more efficient processes. If a company owner or their administrator is not capable of doing this, they could outsource it to a bureau or their accountant. 3. Exemption [from filing PAYE information electronically] requests for any other reason could be considered on a case by case basis until more is known and this should be reviewed after six (6) months. 4. "inability to access digital services" should be defined as (i) residing in an area which has no access to internet coverage nor any means of sending information manually to another provider who could submit on your behalf 5. Yes, by Commissioner of Inland Revenue.

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8 months ago
Bernadette
I don't think people should be forced to do this electronically. Many people simply are not comfortable enough yet with internet security and/or use of computers. It should be optional. In addition, I have days when our internet runs like a dog or not at all... when this coincides with the 20th of the month and I can't get my PAYE in (if I haven't managed to do it early), it results in a whole lot of time and hassle to explain why and avoid charges etc...

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8 months ago
Common Sense
In response to the closed questions: 1. No, leave it as it is and stop wasting our valuable time 2. Leave it as it currently stands and stop wasting businesses valuable time 3. Yes 4. Not an issue, leave it as it currently is and stop wasting businesses valuable time. 5. Not an issue, leave it as it currently is and stop wasting businesses valuable time. I think that IRD is just wasting everyones time and money with this whole exercise. It and the Government couldn't really care less about

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8 months ago
ion
There should be none, unless there is a guarantee from the IRS that broadband connection will be provided to anyone who is GST registered

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7 months ago
Financial Adviser
The option for manual filing should always be there but encouraging people to use electronic is useful

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7 months ago
Mario Becroft
While personally I prefer to file information online via IRD's web site, in my opinion each employer should have the option to filing online or by paper. There should be no maximum at which online filing is required.

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6 months ago
Martin Etherington
1. It is extremely rare for a business to not have a computer or access to a computer or unable to outsource to someone who does have a computer. Therefore in my opinion, the ability to file by paper should be removed. i.e. A threshold of zero. There would need to be sufficient lead time for some businesses to adopt electronic filing. 2. An alternative is that all those using payroll software be required to file electronically. (But how do you verify this?)

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5 months ago
Angus Ogilvie
I think the department should be cautious about reducing the existing threshold of $100k. Many smaller employers do not currently operate payroll software and some of the products in the market are really quite expensive for a small business. Those with employees on salary can easily calculate PAYE owing from the tax tables on the IRD website.

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5 months ago
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