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Inland Revenue

Tax Policy

Appendix - Proposed PAYE changes

The key changes proposed in The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill currently before Parliament are:

  • Employers and payroll intermediaries[24] will no longer be required to file an employer monthly schedule; instead they would file employment income information on a payday basis from 1 April 2019.
  • Employers using payroll software will be able to file their information directly from their payroll system.
  • Employers will not be required to use payroll software but would have to file their PAYE information on a payday basis.[25]
  • Employers with the smallest payrolls will still be able to file their PAYE information on paper if they choose to do so. The threshold for electronic filing of PAYE information will reduce from $100,000 a year of PAYE and Employer Superannuation Contribution Tax (ESCT) deductions to $50,000 a year.
  • The Government is not proposing to change the dates by which PAYE and related deductions must be paid to Inland Revenue. However, employers will be able to make these payments on payday if they choose to.
  • To improve the workability of the rules, minor changes will be made from 1 April 2018 to the PAYE rules for holiday pay paid in advance, and to align when rate changes come into effect.
  • The payroll subsidy, which subsidises employers to outsource their PAYE obligations to listed payroll intermediaries, will cease from 1 April 2018.

24 References to employers should generally be read as including payroll intermediaries.

25 For payroll intermediaries, employers above the electronic filing threshold and for those below the threshold using payroll software, the due date would be two working days after payday. For employers below the electronic filing threshold not using payroll software, the due date would be seven working days after payday.