Summary

The Tax tab stores an employee's personal tax information, which determines the amount of tax they pay.

Fields

Residency status:

Resident is a mandatory field for new employees because PayGlobal uses it to check whether the employee is eligible for KiwiSaver.

• Resident
• Non-resident
• Tax resident

  When you select "Tax resident", the following Confirm message appears:

  “Tax residents do not have the right to live permanently in NZ, but are here for more than 183 days in a year or have an enduring relationship with NZ. Are you sure that “Tax resident” is the correct Residency status for the employee?”

  • Click Yes to set the employee's Residency status to “Tax resident”
  • Click No to revert to the employee's original Residency status.

    Note: The Confirm message does not appear if you model the Residency status = “Tax resident” field.

IRD number*:

The employee's IRD number. You must enter an IRD number before you can save the record. This field cannot be blank. PayGlobal uses an algorithm checksum to ensure that the number is valid. If you enter an invalid IRD number, when you try to save the record, an "Invalid IRD Number" error message appears and you cannot save the record.

If you do not know the employee's IRD number (for example, the employee is a contractor or volunteer), then enter a string of zeroes (000-000-000). PayGlobal will:

• Tax the employee at the highest marginal rate.
• Set the employee's Tax code to "ND - No Notification".

Employees with Tax code = "NSW" can also have IRD number = "000-000-000".

Tax code:

Employee's tax code, such as "M - Main Income". When you process a pay, PayGlobal validates employee tax codes. If the employee's tax code is invalid, then pay processing fails and the following warning appears in the audit log:

"Employee has an invalid tax code which will need to be corrected for correct PAYE calculations and IRD Reporting. Process failed."

Note: The IRD issues Tailored Tax Codes (STCs) by tax year so they always expire on 1 April the following year. When a Tailored Tax Code expires the employee must apply for a new STC by filling in an IR330 Tax declaration form or you need to change the employee's tax code to ND (Non Declaration, highest tax rate).

Tax rate*:

Enabled when Tax code = [Blank], "WT" or begins with "STC". You can enter a percentage-based taxation override rate if necessary.

• If the Tax code = [Blank], PayGlobal will treat it as though it was "STC".
• If the Tax code = "WT", enter the rate for the nature of the job the employee is employed - refer to Schedule 4 activities on the back of the Tax code declaration (IR330) form.
• If the Tax code = "STC", "STC SLM" or "STC SLS", enter the rate given on the Tailored tax code or deduction rate (IR23) certificate

For tax codes beginning with "STC", process pay handles the ACC Earner Levy; therefore the rate you enter must exclude the ACC Earner Levy amount. For example, if the rate on IR23 for 2022/23 was 16% then you should be entering 14.47 (i.e. 16.00 - ACC Earner levy amount of 1.53).

Print on EMS:

Despite the field label, this field controls whether the employee is included in data sent to IRD.

Prior to Payday Filing, this field controlled whether the employee was included (Yes) or excluded (No) on the Employer Monthly Schedule (IR348) file.

With Payday filing, regardless of whether you use the FileUpload solution or the Gateway Solution, setting this field to Yes means the employee is included in all Payday datasets.

Exempt Earner Levy*:

This Yes/No field indicates whether the employee is exempt from paying the ACC levy, and it is usually set to "No". An example of an exempt employee could be a company director who had made their own arrangements for health insurance.

Employees with Tax code = "WT" must manage their ACC Earner Levy payments with IRD directly so set Exempt Earner Levy to “Yes” for those employees.

Further Reading: See ACC Earner Levy Calculation (NZ)

ACC Code:

This code determines the organisation's liability for ACC on an annual basis.

School child for taxation:

Enabled only for employees who have a Date of birth value and are under 20 years old. This Yes/No field allows you identify employees who are school children.

An employee is defined as a school child if they meet any the following criteria:

• Under 15 years old at any time during the tax year.
• Under 18 years old at any time during the tax year and attended school at any time during the tax year.
• Turned 18 years old on or after 1 January immediately before the start of the current tax year, and attended school for at least part of the current tax year and at least part of the previous tax year.
  

  Note: Fields marked with an asterisk will be be disabled for editing if the employee is enabled for fully featured workforce management integration. These fields are sourced from workforce management.

School children

Employees who have School child for taxation = "Yes" will need to fill out an IR330 even if their annual earnings are expected to be less than or equal to $2,340 or you will have to set their Tax code to ND.

Note: From 01/04/2013, school children with Tax code = M are no longer entitled to a tax rebate of $4.72 per week.

Employers do not have to make KiwiSaver contributions for employees who are under 18 years old or to school children who do not have PAYE applied. Any contributions made to such employees are liable for Employer Superannuation Contribution Tax (ESCT).

Currently, school children are included in the Employer Monthly Schedule report, but they may be excluded in a future release, depending on IRD recommendations.