Schedular (Withholding) Payments

Summary

In New Zealand, certain employees, such as contractors or workers on commission, receive Schedular (withholding) payments instead of wages or salary. Sometimes an employee will pay part PAYE and part Schedular (withholding) tax because their bonus payments are subject to Schedular (withholding) tax, which is a flat tax rate. Employers must deduct Schedular (withholding) tax from these employees unless they provide a valid Certificate of Exemption (IR331).

Employers are not responsible for deducting Schedular (withholding) payments for:

ACC earner levy
Student loan repayments (depending on the tax code that the worker uses)
Schedular (withholding) tax values can be exported to a General Ledger account.

Setup

You can set up Schedular (withholding) payments:

As a non-taxable allowance (not recommended)
From the employee record
From the allowance.

Non-taxable allowance

In the past, some organisations set up Schedular (withholding) payments as a non-taxable allowance. However, Schedular (withholding) payments are taxable so this method leads to incorrect reporting. We do not recommend using this method unless it is absolutely necessary for your database.

Employee record

This method uses the employee's record to record their Schedular (withholding) payments.

In the relevant employee record, navigate to Payroll | Payroll | Tax.

Complete the following fields:

Field	Value	Details
IRD number	Employee's IRD number	Schedular (withholding) payments cannot be calculated unless you enter a valid IRD number
Tax code	WT	Payments to this employee are taxed at the "Schedular (Withholding) Payments" rate specified in the Tax rate field.
Tax rate	Applicable tax rate for the type of work carried out by this employee	Allowances paid to this employee are taxed at this rate
Print on EMS	Yes	Print employee details on the EMS report
Exempt Earner Levy	Yes	Employee must arrange to pay their own earner levy

Results:

Action	Result
Processing	Schedular (withholding) payments are displayed in the transaction PAYE field
Closing	Employee's YTD fields are updated with their PAYE value
Printing the EMS	PayGlobal sources Schedular (withholding) and PAYE values from the master file. Schedular (withholding) values are reported as WT and any remaining PAYE is reported as the tax code in the master file.

Allowance

In this method, the EMS report displays all Schedular (withholding) allowances. These taxable allowances are used when an employee receives a Schedular (withholding) payment.

Navigate to Organisation | Entitlements | Allowances.
Press Insert to add a new allowance record and add a Code and Description.

On the Details tab, complete the following fields:

Field	Value
Type	"A. Allowance" or "H. Hourly"
Taxable	Yes
Tax Override	Yes
Tax override rate	Schedular (withholding) payment rate
Tax override type	"W. Schedular Payments" or "E. Extra Pay" or "R. Redundancy/Retirement"

Complete other details as required, and then press Save + Close.

Results:

Action	Result
F9 Processing	Tax is calculated at the tax override rate specified in the allowance
Processing	Standard allowances - Allowances that are not tax overrides are processed normally. Schedular (Withholding) allowances - Taxed at the flat rate specified in the allowance. PAYE values in the master file are updated with tax values from Schedular (withholding) allowances. Extra Pay and Retirement allowances - Taxed as a T-type allowance (Tax override type = "E. Extra Pay"). Audit log displays a warning if a T-type allowance is used in a pay.
Closing	Employee’s YTD fields are updated with the PAYE and Schedular (withholding) values
Printing the EMS	PayGlobal sources Schedular (withholding) and PAYE values from the master file. Schedular (withholding) values are reported as WT and any remaining PAYE is reported as the tax code in the master file

Reporting

EMS Report

The EMS Report (IR348) can display PAYE and Schedular (withholding) payments.

General Ledger

The General Ledger exports the GL Journal (PGPRGENE002) and the virtual table when exporting a WT code to GL accounts. If WT is not present, PayGlobal exports the WT value because the PAYE value also contains the Schedular (withholding) payment.