1. New Zealand Payroll Practitioners Association
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New Zealand Payroll Practitioners Association
Payroll trends and insights presentation
October 2019

2. 1
Assurance Providing trust, confidence and insights through data

3. Payroll trust, confidence and insights
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4. Payroll trust, confidence and insights
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5. Payroll trust, confidence and insights
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6. Payroll trust, confidence and insights
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7. Payroll trust, confidence and insights
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8. Payroll trust, confidence and insights
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9. 2
Tax Common payroll challenges

10. The importance of payroll
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11. Why is PAYE important?
Finance
Payroll HR
Strong compliance requires communication between Finance, HR and Payroll.
Inland Revenue does care
Are things in the right ‘bucket’?
Social policy flow on
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12. Communication breakdown
Employees expect to receive the total amount they paid in the hand
Example:
$50 reimbursement for wellness
Employee earns $75,000, on M SL code
Not a KiwiSaver member
What is the amount of the gross reimbursement?
Options are:
$74.63
$76.21
$93.27
What about
KiwiSaver?
Holiday pay?
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13. Allowances/ reimbursements - Taxable vs non-taxable
Overarching principle – s CW 17 of the Income Tax Act 2007
Allowances/reimbursements will be tax-free when the expenditure is expenditure for which the employee would be allowed a deduction if they incurred the expenditure and the employment limitation did not exist.
Specific exemptions
Relocation – CW 17B
Overtime meals – CW 17C
Certain work-related meals – CW 17CB
Distinctive work clothing – CW 17CC
Additional transport costs – CW 18
Short term visits – CW 19
Accommodation
Some of the main areas where we are identifying errors are:
Allowances incorrectly being treated as tax-free when they are taxable
An allowance having no correlation to an actual or reasonable reimbursement
Failure to understand when specific exemptions may or may not be in point
Provision of accommodation and not appreciating the peculiarities with the exemptions that exist:
Out of town secondments and projects – CW 16B
Conferences and overnight stays – CW 16D
Multiple workplaces – CW 16F
Relocation – CW 17B
Valuation issues – IR produced paper on this for domestic but not international
Usual suspects of:
S123 payments not meeting IR interpretation of a genuine S123 payment,
Employee-contractor distinction
Failing to account for withholding tax
System flags not correctly set for ordinary – v –extra pay, superannuation flags incorrectly set

14. Recent developments – aside from Payday Filing!
Inland Revenue Papers
Exposure Draft 217: Employer-provided travel from home to a distant workplace
Exposure Draft 219: Employee use of telecommunications tools and usage plans
Operational Statement 19/04b: Commissioner's statement on using a kilometre rate for employee reimbursement of a motor vehicle
KiwiSaver Changes
KiwiSaver employee contribution rates now 3%, 4%, 6%, 8%, 10%
Max contributions holiday period now one year (was five)
Now called a “savings suspension”
Over 65s can opt-in to KiwiSaver
Lock-in period removed
Impact on compulsory employer contributions
For employees who joined KiwiSaver prior to age 60, we are not required to make contributions after they turn 65.
This is correct, the employer contributions are not compulsory. The employee can choose to withdraw funds or continue to be a member of the KiwiSaver scheme and make employee contributions.
For employees who joined KiwiSaver at or after age 65, we are not required to make contributions.
That is correct. Although employees over 65 can now opt-in to KiwiSaver, there is no lock-in period so compulsory employer contributions are not required.
For employees who joined KiwiSaver between years of age, we are required to make contributions until the end of their 5 year lock-in period,
Yes that is correct, all over 60 year old's who joined KiwiSaver prior to the repeal of the lock-in period (1 July 2019) will remain locked-in to KiwiSaver for the duration of the five year period. This group will remain entitled to compulsory employer contributions until the expiration of the lock-in period.
· unless their date of joining was on/after 1 July 2019 (because there is now no lock-in period).
Also correct - these individuals will only remain entitled to compulsory employer contributions until they turn 65.

15. IR transformation – impact on employers
Payday filing
Pre- populated accounts
Tailored tax codes
Use of data analytics
A lot of change that has and will impact employers

16. Managing risks
Employee receives a demand at year end - how do you respond?
Are you comfortable that the payroll is correctly calculating PAYE?
Are you comfortable with your paycode settings for PAYE and KiwiSaver?
Are you ready to respond to Inland Revenue’s proactivity?
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17. Thank you Vaughan Harrison Partner, PwC Phil Fisher Partner, PwC
Jeff Casey
Partner, PwC
Vaughan is an Assurance Partner and has 18 years experience providing trust, confidence and insights across a range of business, technology, data and change areas. Vaughan reviews a number of payroll functions, processes and systems and will share the common payroll operational and management challenges and risk observed across a range of organisations
Phil has been providing tax compliance and consultancy services for more than 25 years, with the last 13 years focused on the delivery of indirect tax advisory services to a range of public sector and large corporate clients. Phil will discuss the common payroll-related challenges and risks he sees at his clients, and share some of the practical ways to navigate these issues
Jeff leads the New Zealand Enterprise Applications and Technology Transformation Projects business for PwC. Over his 20 year career Jeff has delivered a large number IT projects and Post-Merger Integrations. He has fulfilled project roles from Process Design through to Program Director across both the public and private sector – covering HR and Payroll, among many others. Jeff has delivered major domestic and multi-national IT projects across the full implementation life- cycle in New Zealand, Australia, United States, England, Japan, Ireland and Russia,
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