Introduction

The Government is modernising New Zealand’s tax system to make it simpler and more certain for New Zealanders. Improving the administration of PAYE is an integral part of this reform.

Employing staff can add significant compliance costs to a business or not-for-profit organisation. The Government wants to do something about this.

Increasingly employers are using payroll software to help them run their organisations. The proposals below would further integrate tax obligations, such as providing PAYE information to Inland Revenue, into employers’ own systems and processes. Meeting tax obligations would become part of the process of paying employees rather than a separate and additional activity.

The proposals would make it easier to get an employee’s pay right and to quickly address issues, such as using the wrong tax code. The result would be lower compliance costs for employers and improved accuracy of deductions for employees.

The proposed changes are likely to be included in a tax bill for consideration by Parliament in 2017.