Payday filing – Inland Revenue prefers education over penalties

Inland Revenue (IR) would like businesses not already filing their payroll information every payday, to seek the help they may need before IR calls them.

While 90 percent of businesses are successfully meeting the new obligation, IR’s small business segment leader, Richard Owen says there’s a small minority who should have filed but haven’t or simply haven’t needed to file because they didn’t pay any staff in the past few months.

Since April 1, all employers have been required to send their payroll information to Inland Revenue at the same time as they pay their staff. There has been around 2.5 million payday filings since it became mandatory.

“We think the main reasons some have fallen behind are a lack of awareness and understanding about their obligations and a perception that it’s difficult to send Inland Revenue the necessary employment information” said Mr Owen. “These are obstacles that can be easily overcome.”

“We would prefer if those customers got in touch with us and we can help them work through their situation. Most employers want to do the right thing and we’re here to help them do that,” he said.

“Our analysis shows most of those yet to start payday filing are businesses with fewer than five employees and we want to help them get back on track.”

Payday filing is integrated into the process of running a payroll in most of the software applications in the market. Often it requires a few extra clicks and all the employment information is filed direct to Inland Revenue.

Software is not essential though and filing information in the payroll account in Inland Revenue’s online portal, myIR, can almost be as quick. This is often the preferred option of businesses with a small number of staff to pay. After the first filing of employment information, this free service pre-populates some of the information required based on previous filings so often it can simply be a case of making a few adjustments and submitting.

Mr Owen suspects some employers may be worried about making mistakes with payday filing. “We’ve heard particularly from employers for whom English is a second language that some are a little anxious about getting things right and perhaps a bit confused about what’s required. We want to ease those concerns.

“When you consider that this is a new process with more regular filings, employers have done incredibly well to come to grips with it so quickly,” says Mr Owen. “Payday filing is off to a good start.

“Our tax system is the better for it too. The more regular employment information will allow us to help make sure our Working for Families customers receive more accurate entitlements. It will also allow us to make smarter interventions when we see someone is over or under paying tax. We’ll be able to suggest a new tax code to help more customers get back on track and pay the right amount of tax at the right time.”

From the IRD News website | © Copyright 2020 Inland Revenue.