Our payroll software already has the ability to manage employee deductions. Once loaded this saves a lot of time and hassle.

It would be useful to expand this, perhaps by adding the ability to connect to I.R.D (securely from within the software) when loading a pay run to receive corrections or feedback (regarding this and the previous pay run) or to add the ability to confirm the correct use of tax codes such as WT and STC.

This could save a lot of time, stress and penalty fees, knowing that I.R.D has confirmed the correct application before the run has been posted.

This kind of connectivity would also be useful to send our ir-File directly from payroll.

The following is the text of a patent application I made but never followed up after initial rejection. You are free to use this idea as you see fit:

Background of the Invention
New Zealand Income Tax laws present a substantial obligation and risk to small business employers. The obligation of preparing PAYE returns every month, the obligation of correctly calculating the amount of tax to deduct from employee wages, the risk of penalties should those tasks not be performed correctly, and the risks that insufficient funds are set aside to cover tax payments resulting in penalties and possibly criminal sanctions.

For large companies these obligations and risks have dedicated staff to handle them. The staff are expert in the preparation of PAYE information and will have automated computer systems to help with the preparation of the information. Small business owners however often lack the expertise and experience and so can get into difficulties, running the very real risk of large penalties and possibly even criminal sanctions if the proper returns are not filed and the right amounts of income tax are not paid. This is a discouragement to small businesses employing new staff.

The Government now has a system where employees need not file income tax returns every year if they earn no other income except as an employee. This has greatly simplified collection of revenue for the Government from employees, and reduced the burden of preparing tax returns for hundreds of thousands of employees. This invention seeks to address the automation of the collection of income tax employers deduct from employee pay (known as PAYE in New Zealand).

Summary of the Invention
The invention is a system in which a company uses a bank operated automated service to handle income tax reporting and payment. The benefits of the invention will be the automation of monthly returns to the Government and the automatic handling of payments going to employees. This eliminates the possibility of tax not being properly paid. This in turn will eliminate the need for financial or criminal penalties and thus reduce the risks to a small business. The invention will typically be implemented by the bank used by the company concerned.

According to the first aspect of the invention a bank will allow a company to set up special automatic payments for its employees. In addition to the normal information collected for an automatic payment such as bank account number, amount to pay and pay period, the bank will also collect the IRD number of the employee, the tax code, student loan information, and other information related to the employee tax obligations.

The second aspect of the invention is that the bank will deduct the gross pay from the employers account in the same way that it would for a normal automatic payment. The bank will then transfer the net pay into the employee account and deposit the tax deductions with the IRD in the name of the employer, as if the employer had paid the amount themselves.

The third aspect of the invention is that the bank will prepare reports for the employer detailing payments to each employee in order for the company to maintain their own record of pay and to provide deduction information to employees. The bank may also provide information to the employees directly in the form of a [electronic] payslip.

For a copy of the full text of the patent, including details of an example implementation and XML schemas please contact: cheetah100@gmail.com

We are a church with an average of 3 to 4 people on the payroll. All our payments require two signatures on a cheque which is the reason why we process our P.A.Y.E etc. manually and pay by cheque.

Has anyone or the I.R.D an answer to overcome this problem?.

I have a small business with 3 employees and have written my own payroll software using the IRD's published formulas. If I have to use a certified software developer's payroll software to comply with a new on-line filing system it is going to be yet another compliance cost.

I don't see why the IRD cannot have it's own on-line payroll software that takes care of all the calculations and makes the deductions. After all we are only doing it for the IRD's benefit and it would be one way that compliance costs could actually be reduced. Why should we have to pay a third party to do the IRD's work when the IRD have the computer systems to do it themselves? There would then be no need to have to interface with anyone else's computers, the data would be entered and processed in the IRD's own database.

Please dont do anything that will ensure increased compliance costs for non-profits eg make purchase of payroll software compulsory. Have a heart for the many small non-profits that pay one or two employees manually.  They are always trying to make every $1 count in their efforts to serve the community and its disheartening to face compulsory increased costs.; Sometimes in very small organisations, a manual system works just fine.

I use Excel to calculate my payroll and fill in a paper form. I only have 6 employees so that is all I need in a system. I do not want to have to access a big IRD online database to do my wages, nor change my software to the IRD's software.

What about all the people who do their wages in a book - they do not want to start using an IRD application.

Anything that makes it easier and less stressful - but it has to work and if it doesnt it is not necessarily the employers fault.  IRD systems and service are not good in my experience.  Even something as simple as getting PAYE forms redirected has taken over 2 years and is still not correct

I am a treasurer for a non-profit early childhood education service.  We have one employee, and our own rather unsophisticated software, but it does the job.  Whatever new software requirements are introduced to be able to make PAYE and other tax payments more automatic (i.e. in sync with IRD website) need to take into consideration the needs of small NGOs.  These entities work on volunteer labour and don't have huge budgets for buying software.