New PAYE system a nightmare for firms

By Brian Fallow

WELLINGTON - Transition to a new streamlined PAYE system is proving a nightmare of frustration for many employers who are required to file their monthly returns electronically.

Queues are long for the helpdesk as firms encounter difficulties connecting with Inland Revenue's electronic filing system, ir-File.

The IRD's national manager of strategic projects, Alan Foubister, said the department acknowledged people were having trouble gaining access, and that the situation was not good enough.
"Today there are 23 people on the [helpdesk] phones. We are trying to get that up to 30 by the end of the week. But they have to be found and trained and it is taking us a little longer than we thought to get the numbers up."

The IRD says simplified PAYE requirements will save employers about 1.5 million person-hours a year in compliance costs.

This is the last year 1.2 million wage and salary earners will be required to file annual IR5 tax returns. That annual chore has required employers to process about 4 million IR12 and IR13 tax deduction certificates and do an annual reconciliation - among the more irksome compliance costs businesses complain of.

But while they deal with that for the last time, employers also have to contend with bedding down the new system, which relies on employees being accurately taxed at source.

Just over 12,000 employers with annual PAYE deductions of more than $100,000 a year will be required to file their monthly returns electronically, of whom 1600 have been exempted from the requirement until next year.

The other 175,000 employers will continue to file on paper unless they opt to do so electronically. "Over 50 per cent \[of the 10,500 larger employers\] have done everything they are required to do and downloaded the software," Mr Foubister said.

"There are one or two little issues with the system that we are having to call people back on. But the majority of the people contacting us just need to be helped step by step through the process."

The deadline for their first monthly filing is May 5. Normally a late filing would attract a penalty of $250 but the IRD has said it will waive that except in cases of blatant non-compliance.

The chief executive of the Employers and Manufacturers Association, Alasdair Thompson, said that after hearing a number of horror stories from employers, he had written to Revenue Minister Bill English four weeks ago detailing their problems and seeking assurances.

The letter had yet to be acknowledged.