Aotearoa New Zealand DAG Payroll Working Group

The group was given updates from the Inland Revenue Policy Team and acknowledged improvements in IR’s early engagement on policy proposals and the value of collaborative consultation

Attendees discussed the proposed changes to Employee Share Scheme (ESS) reporting, Payroll Calculation and Business rules Specification document, Improved Business Tax program (IBT), Employer superannuation contribution tax (ESCT) and Vehicle Kilometre Rates feedback.

The group discussed Inland Revenue’s year-end documentation and the need for earlier access to key resources to support compliance. Members raised concerns about documentation gaps and accessibility as Inland Revenue transitions to a new portal. The group also provided feedback on mileage rate adjustments and discussed DSPANZ’s role in ongoing Holidays Act consultations.

The group reviewed action items and engagement challenges, noting delays due to payday super priorities. Inland Revenue provided an update on its Policy Work Programme, focusing on compliance cost reductions and digitalising payroll processes. Members discussed the need for clearer tax guidance for employees and improvements to the communication of legislative updates.

Members discussed recurring payroll submission errors and potential improvements to employer onboarding processes. Inland Revenue provided insights from a recent personal income tax survey, highlighting the need for earlier access to tax change information. The group also reviewed Fringe Benefit Tax compliance burdens and discussed security concerns around IRD number validation.

Inland Revenue introduced the Gateway Customer Service Portal, designed to streamline case tracking and payroll issue resolution. Members raised concerns about payroll update timelines and clarity ahead of the 31 July deadline. The upcoming disaster recovery tests were also noted, with formal communications expected soon.

The group was provided with updates on IR Policy Team’s work plan, which included options for addressing Employer Superannuation Contribution Tax (ESCT). The group raised challenges of digitising forms that currently require wet signatures, particularly for employee tax and onboarding documents. Members discussed recent changes to the RSE scheme, particularly regarding sick leave entitlements and their impact on payroll systems. Outlining concerns about the lack of consultation about the lack of consultation with software providers prior to these changes, which caused operational disruptions.

Paul Orford was introduced as the new co-chair. The group reviewed the Payroll Software Developers Casebook and provided feedback for future updates. DSPANZ expressed interest in MBIE's Holidays Act consultation and will revisit previous letters to ministers. Discussions included the timely issuance of payroll documents, the availability of the online calculator, and physical tax tables. Updates from the Inland Revenue Policy Team, including ESCT, are expected at the September meeting.

The group discussed the implications of not adjusting tax rates and communication strategies. The importance of using new tax rates starting 31 July was explained, and necessary adjustments for resident withholding tax and secondary tax code rates were highlighted. A new FBT calculation formula was introduced to align with personal income tax changes. Timely communication to ensure clients are aware of their options was emphasised. Inland Revenue's strategies for managing these changes were outlined. The group expressed gratitude to Kat Cavanagh and announced Paul Orford’s temporary role as co-chair.

The group discussed the policy change process, highlighting potential roadblocks and the "SquareUp" concept for ESCT adjustments to reduce compliance costs. They emphasised early involvement in legislative processes and plans to transition to digital forms with guidelines for digital signatures. KiwiSaver amendments and their implications on fiscal strategy were reviewed, focusing on minimising compliance burdens. Early discussions on draft payroll specifications highlighted the importance of stakeholder feedback. New multinational tax bill rules focusing on digital taxation were introduced. Plans for future stakeholder engagement, including establishing a relationship manager with MBIE, and Slack channel updates were also covered.

Welcomed Kat as Co-Chair, who will serve as the primary DSP contact and assist in framing discussion topics. The Taxation Bill draft has been delayed to April 1, 2025, prompting the group to prepare questions for the IR Policy Lead and extend invitations to future meetings.

Updates from DSPANZ planning days were shared, including the formation of a tax-specific working group within the DAG.

GWS Operating Model update was provided, focusing on payroll to enhance efficiency and customer support through framework enhancement and process development. The Gateway Services system shutdown is scheduled for Saturday, March 16th at 2 pm.

The group discussed updates on payroll specs, budget changes, and MBIE Labour Inspectorate responses. Concerns regarding the ESCT issue were raised, suggesting a revisit with IR policy in six months. The 'congratulations letter' to the incoming Minister for Workplace Relations and Safety was sent, and the proposed Holidays Act changes statement is now published on the DSPANZ website, pending further engagement steps.

The group discussed the introductory letter for the incoming Minister and proposed creating a statement on the proposed Holidays Act changes, as well as, MBIE Labour Inspectorate responses. Explored current operations - identifying areas for improvement and highlighting elements for retention in 2024. Future agenda items were addressed, including concerns about Payroll Specs, wet signatures, forms information, and data capture.

Additionally, the group received updates from the Gateway Services team about portal access and provided feedback on the Enterprise Services Customer Support Portal roll-out.

The group will outline their requirements and needs for Employer Superannuation Contribution Tax over/under deductions. It was agreed that DSPANZ will compile the industry's requirements and needs into a formal letter. This letter will serve as the collective voice of the industry and will be submitted to the Inland Revenue Department (IRD) for further consideration and action.

DSPANZ will be putting in a submission to the Employment Relations (Restraint of Trade) Amendment Bill, the group provided feedback on potential areas or topics to focus on. The group discussed potential individuals or entities to establish relationships with.

The group discussed the KiwiSaver Act, focusing on the need for clarity in salary sacrifice arrangements and concerns about system inequities. Draft submission will be circulated to the group for input.

Angela informed the group about upcoming ServiceNow Customer Service Management (CSM) changes, currently in the trial phase, with further details to follow.

The group provided feedback on the Draft ESCT Issues Letter, with more input expected.

Discussions centered on the groups expectations of digitising forms, with an emphasis on defining form priorities, input requirements, formats, streamlining, preferences, and attributes of effective digital forms.

Clarification was provided regarding the wording related to "the first month of a period of employment" for Payroll calculations & Business Rules Specification Document. It was confirmed as valid, specified in schedule 5, part B, clause 3 of the TAA 1994.

The Restraint of Trade Bill Submission was updated with group feedback and submitted.

The group was presented with an overview of the digital transformation of payroll, engaging in detailed discussions for feedback on current services. Detailed discussions on each service were conducted, providing an opportunity for feedback to enhance product integration.

Updates were provided on the status of both the KiwiSaver Submission and the ESCT Letter. Additionally, the group explored the possibility of preparing a collaborative letter to the incoming Minister to review the Holidays Act. A document will be created within the group to contribute questions for discussion with the MBIE Labour Inspectorate.