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Implementing the change for PAYE Information

How should the future look for IR56 taxpayers?

Some employees are responsible for paying their own PAYE – these are known as “IR 56 taxpayers”. They include private domestic workers, embassy staff, some NZ-based employees of overseas companies, and United States Antarctic Program personnel. IR 56 taxpayers are required to file two forms, and pay their PAYE, by the 20th of the following month.

If there is a general requirement to provide PAYE information when the business process occurs requiring  IR56  employees to provide their PAYE information on a payday basis would be  onerous for them.   

If there is a general requirement to provide PAYE information at the time of the business process it is proposed that IR 56 taxpayers would be required to provide their PAYE information by the 5th of the following month, as proposed for employers unable to access digital services, rather than the 20th as now.

Questions

1.  Do you agree that IR 56 taxpayers should remain responsible for submitting their own PAYE information, and paying their own PAYE deductions, to Inland Revenue, rather than their employers?

2.  Do you think that IR 56 taxpayers should have to provide their PAYE information to Inland Revenue earlier (for example, by the 5th of the following month), or do you think that by the 20th of the month following payment is still sufficient?

Comments

Software training contractor
My answers to the previous question answer this one too. 1. Yes, but 2 is a bit onerous. You'd potentially have people obligated to do this in random locations such as the Ross ice shelf in a tent somewhere...wouldn't be a good look would it, to have people thinking about filing out tax forms instead of being engaged on more pressing matters.

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8 months ago
PW PATSTON
As a user of Individualised Funding (IF) for my disability support needs, I consider the IR56 tax payment model a liability as an employer. Asking people to file their own PAYE is tedious for them to do and me to manage. For this reason I've never required this of my employees, preferring to use an online payroll system to pay staff in the same way I pay employees of the company of which I am Managing Director. Having said this I can see no reason why employees who currently fit the IR56 criteria could not be registered as self-employed like so many other freelance workers and either have WHT deducted and/or pay tax at the end of their financial year.

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8 months ago
Rob Creagh
As a service provider for the Ministry of Health's Individualised Funding scheme, the most significant issue we see with ir56 is that it appears to ignore employment relations legislation. On one hand it classifies the worker as an employee and provides a mechanism for the payment of PAYE but ignores an employee's entitlements to leave. While the ir56 option looks at first blush like a simple option for those looking to engage work in a domestic context, our concern has always been that employment legislation demands that there be an individual employment agreement in place and mechanisms to record and provide for leave entitlements. With respect to the questions posed: 1. It seems at odds with employment legislation as above, and 2. Setting aside the contradiction in 1. it seems reasonable to allow the longer period of grace As with earlier comments, WHT and end of year tax returns would be my preference.

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8 months ago
Lisa3
This is entirely impractical. Say your pay comes in on the last day of a month. Depending on public holidays you may have only one business day to do your PAYE. If you always get paid at the end of a month this would always be a short turn-around. Perhaps it would be more practical to have a minimum time lag from the last pay. If not, then the due date will need to be later than the 5th of the month following.

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8 months ago
Bernadette
1. Yes they should do it themselves. 2. No - the 5th is impractical for the same reasons as the previous question... People are leading busy lives running their businesses and can't always free themselves to process this stuff on the first day (or first few days) of the month... and even if they can, NZ post isn't efficient enough to guarantee delivery of non-electronic paperwork in that timeframe. You need to give people a decent window to do this. Leave it as the 20th.

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8 months ago
Common Sense
In response to the questions as put: 1. Yes, let's not complicate things further by increasing the employer base with a lot of piddly little PAYE payers because invariably IR56 payers work for a number of sources who would not otherwise be in the tax base as employers 2. Definitely not. The 20th of the month is more than sufficient for these small fry.

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7 months ago
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