Employing people

Check out our ideas for the future of tax and find out what small businesses thought of them

Future

Our vision for the future when employing people

Employing people may become easier soon. You can read about changes being considered below and watch a short video to see what some of these changes may mean for busy people like Mira.

It’s important to note that some of the examples below may require changes to legislation. The NZ Government has signalled that they are considering all these changes, and more.  You can keep up to date on their proposals at www.makingtaxsimpler.ird.govt.nz (external link) .

You’d get started by registering as an employer through your accounting software with just a few mouse clicks. We’d confirm you were good to go straight away and email you helpful information about your employer obligations.

Plus it would be quicker and easier to get new team members set up correctly in your accounting software – before they start getting paid.

You’d use your software to submit new employee details, eg name, IRD number, tax code, direct to us. Straight away we’d confirm your new employee’s details are correct or let you know if something doesn’t look right. For example if your new employee supplied an “M” tax code, but should use an “MSL” tax code because they have a student loan.

No more need to wait for your monthly EMS to let us know you have someone new on board,  and no waiting for a letter from  us to let you know if a detail on your EMS doesn’t look right.

Your team members will pay the right amount of tax and student loans, right from the start. Plus you’ll save time since you won’t need to contact us to fix employee details on an EMS you’ve submitted.

Your feedback

We asked for your comments around the ideas we had and whether you thought they could work for you. Check out a summary of the feedback.

Thanks to everyone who took the time to share their thoughts.

 

Check out what these changes may mean for busy people like Mira.

What do you think?

Add a comment

What other people are saying

  • would be good if as you pay staff (eg weekly) you could just pay that weeks paye as well...that way never have to worry about doingit by the 20th in one go

    Kevin Blake 20/06/2016 2:48pm (15 months ago)

  • Would really like to be able to get at all historical forms completed, including EMS, as PDF from myIR. Currently GST works but EMS forms are in a strange format and if it didn't print correctly when I was on the confirmation page I can't go back to it.

    Michael W 21/06/2016 10:49am (15 months ago)

  • I like this idea - We need to get a software package that is compatible with yours?

    Margaret Thomas Amani 22/06/2016 1:36pm (15 months ago)

  • Some extra steps that would be valuable for businesses;

    Making it easier for payroll software, accounting software, online banking, and MyIR to be integrated. If staff and IRD could be paid at the same time, with the click of a single button, this would save on having to do this twice as a business currently has too.

    Instead of IRD monthly schedules that don't match up with an employers pay schedule, it would be better if IRD could take micro payments on the go, or disestablish the monthly model all together, and only receive money from employers at the point of payment to their employees or contractors.

    Also for a small business that only works with contractors on a project by project basis it would be great if filing a monthly schedule was less arduous. Rather than having to go in to MyIR and submit a nil return every month when nobody is employed, it would be great if these could be automatically setup to be filed if no data is entered --- or if an employee sets itself with business software that is linked to IRD, a nil return is submitted by default unless an employee is paid through the business software.

    Also the three steps of; submitting a monthly schedule, an EMS, and having to go to your online banking software and paying IRD -- these steps should all be folded into one step where the software does all this work from one form.

    Robin Kerr 22/06/2016 3:17pm (15 months ago)

  • Hi Margaret,

    Businesses without accounting software, but keen to work electronically, can still use Inland Revenue's myIR Secure Online Services to manage their tax.

    But using software does have the potential to help reduce the time and effort it takes to sort your taxes.

    - Inland Revenue's Changing for You Team

    Inland Revenue's Changing for You Team 22/06/2016 4:25pm (15 months ago)

  • This would work well, if you had a great internet connection. For those of us who live rurally, this is not an option

    Kim McLaren 24/06/2016 11:51am (15 months ago)

  • Ok, but then what about the income for all the accountants? Should you just remove all them aswell from earning money as this is the way the backward Waikato area is going. Try a no income business and multiply it by all the others the same and see how that doesn't help the economy! Any ideas on how to improve your tax without ruining other peoples lives in the process?

    Jeff 24/06/2016 4:50pm (15 months ago)

  • For a small business it would be great to be able to pay the employee and their PAYE on the same date this would save doing an extra process every month and make managing finances easier for the small business.
    Plus the whole system seems very long winded, compared to the filing of GST returns which is so much simpler.

    Suzanne Prideaux 24/06/2016 4:50pm (15 months ago)

  • I find the current system really odd, where you calculate your salaries and employer deductions at one point in time - typically when you pay your employees - and submit the return a whole month later, plus make the DED payment somewhere in between. Like others, I would like to do the whole thing in one single go, at the date that I pay my employees. It could be monthly or fortnightly, or at any time, really. Great if the transfers and teturns could be done from the accounting software!
    Also, what a pain to have to enter these nil returns. If you've got low activity for a while, and no employees, you end up being fined for forgetting to submit those. So please can we do away with those. No return means no employees.

    Benedicte 26/06/2016 8:41pm (15 months ago)

  • I started a new small business very recently and went straight into using a payroll system (on the advice of my accountant) that links into IRD. I think we should get an incentive for spending our precious start up cash in this way. We are making IRD's job much easier.

    Leigh 27/06/2016 10:33am (15 months ago)

  • Would be a great idea, but would need to be something that doesn't force people into only a couple (pricier) accounting software packages and that they could continue to use their independent payroll software.
    I agree with the comment that for people who pay weekly wages there should be the option to pay weekly PAYE as it becomes a real headache for some small (and medium & large!) businesses to pay on the 20th, but in smaller bites would be a lot more manageable

    Katie 27/06/2016 4:05pm (15 months ago)

  • I'd be mmore likely to employ people than employ contractors if it was this easy ... and proven :-)

    Guido Biggelaar 28/06/2016 2:57pm (15 months ago)

  • The whole idea that businesses should be responsible for PAYE ought to be rethought.

    Firstly it is a huge extra burden put on businesses, ultimately leading to them employing fewer people which is bad for the economy. Secondly it is a violation of the employee's privacy to have to reveal their tax code, other jobs, student loans and so on to their employer(s).

    Instead, businesses should only be required to pay contractors and employees into any account with a specially reserved suffix (e.g. any -77 account). IRD would monitor income into the -77 accounts and collect the correct tax, loan payments etc. by direct debit, each pay cycle. If someone's income stops or varies they could get their overpaid tax refunded automatically week by week, rather than having to make an end of year claim.

    There would now be no need for second job tax codes, and RWT could be eliminated as interest could be put into the income account. It could be made illegal to pay a person into a non -77 account (an easy thing to trace) and therefore all tax evasion through the cash economy would be all but eliminated.

    So rather than 100,000 businesses implementing systems with the IRD, about 10 banks implement them. Surely that makes more sense?

    Michael Fielding 29/06/2016 5:16pm (15 months ago)

  • Great ideas which make a lot of sense unlike the other changes.

    Nick 01/07/2016 2:47pm (15 months ago)

  • This appears to be a good move but there are number of other questions that have to be considered when employing new staff. Is FBT applicable and if so does the employer qualify for an annual return? IRD needs to enable existing employers to stop filing FBT returns if there circumstances change. There needs to be a lot more thought gone into this and the simplified "videos" are just that.
    We need more in depth advise as to what will happen before a final choice can be made but anything to avoid a lengthy wait on the IRD phones will be great so registering on line both the employer and employees will be more efficient.

    Bruce Sparrow CAPP 01/07/2016 4:49pm (15 months ago)

  • Provided that it does not become mandatory to do so through accounting software. Many small businesses not want/need accounting software to manage a few employees only.

    Stephen 03/07/2016 11:34am (15 months ago)

  • There should be a choice of software providers to calculate payroll & PAYE when registering as an employer. Also, no need to have the multitude of taxes (KSR, KSE, SL, CS, PAY) for each month. Once payment has been made to IRD, a receipt should be emailed back to the employer stating that the correct amount of PAYE was paid. If there was a difference, then the employer should be notified of this.

    Antony 04/07/2016 8:47am (15 months ago)

  • PAYE is the most outdated and complicated system the IRD has and it is the one with the highest penalties when filing late. GST is such a breeze to work with now so PAYE should go in the same direction. Accountants like me absolutely shy away from offering payroll services as it is so complicated and time consuming and would make my services so dear that nobody would take it on.

    Claudia 04/07/2016 9:46am (15 months ago)

  • I really like the suggestion to rethink PAYE collection. Why cannot some businesses simply elect to send the complete gross salary to IRD, have IRD subtract various tax types and pay the net to the employee. Of course employers can elect to remain doing it themselves. Means I don't even vaguely need to know employees tax code and personal affairs. Your current suggestions are great for larger employers though.

    Richard 04/07/2016 11:45am (15 months ago)

  • I do not use accounting software. I submit a monthly EMS. Would I be able to do this electronically without software?

    J McNab 04/07/2016 12:13pm (15 months ago)

  • I don't want to use accounting software. We are a charity running on the smell of an oily rag and we can't afford it. Keep the MyIR process as simple as possible so we can do everything manually without additional software.

    Rodney 11/07/2016 10:09am (15 months ago)

  • Please hire some process analysis to do some usability and interface analysis on the MyIR site to make filing employee data more usable - it's pretty clunky and not initiative at all!

    R Lake 11/07/2016 10:15am (15 months ago)

  • This needs to be optional but I could see this being very helpful

    Deanne 13/07/2016 1:47pm (15 months ago)

  • What would be really useful would be if IRD was able to offer a complete turnkey package that included a secure online accounting package that then directly connected to IRD as suggested in the various proposals (GST, TAX etc). Such a package would need to be secure in the sense that IRD could not access the accounting software licensed to an individual or business, but would have the benefit of a much improved and standard system. Most current accounting packages will require significant upgrade anyway to achieve what IRD are proposing.
    If IRD would prefer not to be in a competing position with other commercial accounting software providers, they could arrange a standard package through a commercial arrangement with a provider(s).

    Ian Pirie 15/07/2016 12:08pm (15 months ago)

  • Like this idea but once again how long it takes for IRD to reply.
    Thanks for this email about these possible changes but would like the IRD to understand
    that some new small business, they do make mistakes and should understand them by giving grace time.

    craig 20/07/2016 3:58pm (14 months ago)

  • My comment is regards Kiwisaver, there are so many forms, ie opt out, opt in etc etc, can this not be done on the same form stating either they are in or out of the scheme? Also is there a way of emailing scanned copies of these forms to IRD rather than posting direct (now postage etc is so expensive)

    Glenda Robb 25/07/2016 12:44pm (14 months ago)

  • It would be great if the IRD could talk directly with companies like Xero about what they think would be the most efficient way to take care of things like PAYE, they'd probably have the best ideas on what would be easiest and most user friendly, that's the we sign up to those online software companies in the first place.

    Victor 25/07/2016 3:25pm (14 months ago)

  • Another great set of idea. It would also be useful for information around other areas of compliance was provided (links to sites, tips, traps to avoid etc.) both for new employers and when changes in process or law occur (updates). A bit like a help center for employers. I am sure one exists but busy employers may not remember to check for changes so it would be good to alert them in the one government-business interface as long as the interface was kept simple/tidy

    Travis 01/08/2016 8:55pm (14 months ago)

  • I agree with many comments above. I like the idea of paying an employee and PAYE at the same time. Keeping it simple.

    Monique 08/08/2016 11:12am (14 months ago)

  • Might be a good idea to SUA in your communications, including this page. Seems likely new businesses are not familiar with all the jargon you use and that is only compounded when you abbreviate them. SUA is, of course, the uncommon three-letter acronym for STOP USING ABBREVIATIONS.

    Paul 08/08/2016 8:50pm (14 months ago)

  • Our payroll programme (smoothpay) is not our accounting programme - will it still be able to connect in the same way?

    Wendy 31/08/2016 8:47am (13 months ago)

  • Could IRD partner with ACC so ACC levies could be paid with the PAYE every pay cycle? Its never a nice surprise opening the annual invoice from ACC.

    Daniel 31/08/2016 2:55pm (13 months ago)

  • Sounds good.

    Josiah 01/09/2016 12:58pm (13 months ago)

  • It would be great if the new system catered for those without accounting software. Even though I have accounting software, I do not have payroll, as I only employee people occasionally. The last time u did I found it cumbersome to fill in the PAYE detail, which had to be done up to three times when paying my employee and when filing PAYE. It would be great if myIR saved all the details from the first time you work out PAYE so it was all there when you come to file.

    Janette Sherwood 03/09/2016 5:07pm (13 months ago)

  • But what if you don't have a software package that does this? We don't have many employees so it is quite easy to set up new people the old way. Again - so long as we have a choice and are not forced to use it.

    Heather 08/09/2016 4:20pm (13 months ago)

  • We don't use an accounting package which will allow us to do this through it so what will happen? Does it mean having to purchase new software and relearn all this. This seems very unfair as we are a causal employer.

    Mary Napper 27/09/2016 6:37am (12 months ago)

  • We are a small company that don't want the cost of new software. This survey is primarily for those already online. Have you even canvassed businesses that aren't online and, if not, won't that skew the results in favour of changes and be unfair to many small businesses that aren't online and haven't intended to be.

    Diana 29/09/2016 8:51am (12 months ago)

  • I agree - it would be great to do PAYE weekly (or whichever pay period is used). Less room for mistakes and it could be set up through the payroll system to be paid at the same time as employees are paid.

    Angela Wilkinson 12/10/2016 7:15pm (12 months ago)

Now

What happens now

When you go online and register as an employer, we confirm your registration by sending you a letter. The letter can take a while to arrive. If you don’t register online, you’ll need to use a form, which can take time for us to receive and process.

We offer training to employers, but you need to attend a seminar in person. Sometimes seminars are only scheduled if there’s enough interest, so sessions might not happen at the time that works best for you.

When you take on a new employee, you need to get their tax code from them. Some people aren't sure how to work out their tax code, and choose the wrong one. If your employee gets ther tax code wrong and doesn’t pay enough tax, they'll face a bill at the end of the year.

Accounting software doesn't link to our system, so some employers have to manually transfer information from their business records to the forms they send us. Figures can be missed, or copied incorrectly. Mistakes take time and effort to put right.

Government’s policy consultation

Making Tax Simpler

Government is conducting a separate series of policy consultations on detailed proposals to make tax simpler.

You can find out about these on Government’s Making Tax Simpler  (external link) website.

You might also want to find out more about this website.