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Changes to New Zealand’s Payroll Reporting System

May 9, 2022

With the growing integration between Reckon, MYOB, and XERO comes changes to the way Inland Revenue Department (IRD) will be processing data in the future. Payday Filing is one significant change which impacts on employers and the way they file their employer reports.


What is Payday Filing?

It is an electronic payroll reporting system. Currently, employers file PAYE information and employee earnings to Inland Revenue on monthly basis, regardless of how frequently they pay their employees. Payday Filing is optional at the moment but it will become mandatory from 1 April 2019. You will still be making your PAYE payments the same way you do now to the IRD, but there will be a change of when you file the paperwork with them.


What Are the Changes?

The New Zealand Government has passed a bill to make Payday Filing mandatory from 1 April 2019. As mentioned above, employers currently report PAYE information about their employees each month no matter how frequently they pay their staff. With the new changes, Inland Revenue requires employers to send payroll information at each payday, rather than on monthly basis. Complying to this change is mandatory under the Employer Monthly Schedule (IR348). For example, if you pay your employees on weekly basis, then you will need to report PAYE information four times a month.


The change will be applied and become mandatory on 1 April 2019. However, you can choose this method of Payday Filing before that. You will need to contact Inland Revenue directly if you want to start Payday Filing earlier.


Why Are They Making the Change?

Inland Revenue’s processes and systems are being redeveloped to take advantage of modern digital technology. With these changes, the information will be received timely allowing IRD to work out entitlements and tax fast and accurately. As a result, it will provide more confidence to employers that they are paying the correct amounts throughout the year. Filing will become fully automated and a part of your normal payroll process, so you won’t need to remember to send returns in at the end of each month.


How Might This Affect You?

Employers with $50,000 or more of PAYE deductions a year are required to conform to these changes sometime between 1 April 2018 (voluntary opt-in date) and 1 April 2019 (mandatory compliance date). This means as an employer, you will need to upgrade to a Payday Reporting compliant payroll system. Furthermore, you will also need to review some of your payroll procedures.


The extent to which the Payday Filing changes might affect you depends on the size of your company and whether or not you use a payroll software. If you are not running a computerized payroll system, then it is recommended that you look to do so preferably earlier than 1 April 2019 so you get used to electronic filing. On the other hand, if you already have a computerized payroll system, then it is recommended that you make sure it is compliant.