Called payday filing, the Kiwi system went live from Monday this week (1 April) and applies to all employers of New Zealand residents — including foreign businesses — and takes effect for each employer from the first pay run they make from that date.
The system, just like Single Touch Payroll in Australia, is designed to have employers submit their payroll data automatically to New Zealand’s Inland Revenue each time workers are paid.
According to the dedicated payday filing web page, the system replaces the previous Employer Monthly Schedule (IR348) form that was used to file payroll details, and applies to businesses with PAYE/ESCT of $50,000 or more.
“The payroll account sits within the ‘My Business’ section in myIR and has been available to all employers for the past couple of weeks to allow them time to familiarise themselves with the new system in advance,” the country’s Inland Revenue customer segment leader, Richard Owen, said in a post on its website dated 27 March 2019.
“I would encourage employers to examine those guides on our website and have a good look around the payroll account in myIR before their first April payday.
“Also, it’s a good idea to take some time to make sure whoever does the payroll has the correct access and permissions.”
Mr Owen said that Inland Revenue has been working with employers in the lead-up to the deadline.
“The main thing we want employers to know is that we’re here to help them be ready for mandatory payday filing from April 1,” he said in the post.
Inland Revenue noted that there are three ways employers can “payday file”, being directly through compatible payroll software, through the myIR portal or, for eligible employers, using dedicated new paper forms.
Integrated solutions sought after by larger businesses
Just like here in Australia, software providers have been working with New Zealand businesses and employers ahead of the reporting change.
Some have jointly integrated both reporting frameworks for businesses, while others have retained separate software for each of the two countries.
Janice Aldinger, product manager payroll at Sage Software Australia — herself a New Zealander — told My Business that a “significant number” of Sage customers have employees across both countries.
“When a lot of the operations for larger organisations actually run out from Australia, so they pay employees from New Zealand here — that’s mainly what happens,” she said, noting that Sage tends to target larger businesses rather than the small business sector.
“Generally speaking, people should be using the same payroll software to do both, because from a management perspective, if you’re going to pay Australian and New Zealand employees, you need to sort of bring everything back from your organisation perspective.”
Ms Aldinger said that, regardless of the way the reporting is done, it is important for Australian-based businesses not to overlook their reporting obligations for New Zealand workers.
“Because the [payday filing] is mandatory, there was a lead-up — just like in Australia last year with STP, before the first of July last year it wasn’t compulsory, it was optional [for employers with more than 20 employees]. Well, in New Zealand, it’s actually mandatory now from the first of April for employers to do the New Zealand payday filing, which is every pay.
“If people aren’t aware of that, then that’s definitely what they’ve got to be doing now.”
‘Limited demand’ for joint functionality
Some of the other providers, which tend to be more popular with small business rather than the mid and large end of the business spectrum, have opted not to offer an integrated offering for both payday and STP.
A spokesperson for MYOB said that “all MYOB NZ payroll products are payday compliant”, but that separate payroll systems are needed for businesses with employees in both countries.
“Although Single Touch Payroll and payday filing are similar, the compliance requirements are different in each country,” the spokesperson told My Business.
“Also, the way Australian and New Zealand payroll software calculates tax, holiday pay, kiwisaver/superannuation is different, therefore requires separate payroll systems.”
Similarly, Reckon Group said that it had opted to keep its platforms separate.
“We’ve seen a limited demand for the above functionality, and therefore did not scope for it. However, if there is increased customer demand, we will be open to exploring the extension,” CEO Sam Allert told My Business.
“We developed our compliance solutions to the specifications of the ATO and IRD’s requirements. For Australia, we developed GovConnectSTP to submit STP reporting to the ATO directly, and for New Zealand we built an export/import functionality to submit payroll reporting to the IRD.
“Our experience is that businesses with a payroll presence in both Australia and New Zealand usually report from entirely separate entities and have a different payroll officer and process for each country. Therefore, they would not benefit from a common portal.”
More information on the different obligations for New Zealand and Australian employers can be found on New Zealand’s Inland Revenue website.
Also, be sure to check out the free My Business guide to Single Touch Payroll, designed to help Australian small businesses make the transition ahead of the 1 July 2019 deadline.