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.
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)?