A major change is coming in the way all New Zealand employers run their payroll and Inland Revenue is urging them to embrace it sooner rather than later.
From April next year, employers will be required to file their payroll information to Inland Revenue every time they pay their staff.
Currently information such as the amount of tax a staff member has paid or how much they have contributed to their KiwiSaver account or student loan is put aside at payday and brought out again at the time of the month when the Employer Monthly Schedule needs to be filed.
Payday filing integrates an organisation's payroll and tax obligations but as Richard Owen, a customer segment leader at Inland Revenue explains, the simplest way to payday file is with compatible software.
"There are some impressive software solutions out in the market, which allow customers to meet their payday filing obligations in just a few extra clicks.
"We're seeing many of the providers upgrading their existing software to incorporate the new requirements at no extra cost.
"I encourage employers to have a conversation with their software provider to see when their payday filing solution will be ready and if they're ready to go, then it pays to get started as soon as possible."
Mr Owen says there are some "real wins" for employees from payday filing.
"Inland Revenue will receive more timely information about people's income, which we will then be able to use to generate an automatic tax assessment for them at the end of the year.
"Payday filing, along with the other changes we're making to the tax system is all about helping Kiwis pay the right amount of tax at the right time."
The new measure also supports what's being hailed as the biggest change to the tax system in a generation with the introduction of automated tax assessments.
This will see about 1.67m New Zealanders get a tax refund paid straight into their bank account for the first time.
Inland Revenue estimates that about 720,000 of those people will not have had any recent contact with them – some not for 20 years or more. That's the reason behind the launch of an extensive public information campaign to inform people about what the changes mean for them.
Just under a third of those due a refund this year are beneficiaries and people who earn less than the minimum wage who have never applied for a refund before.
Some taxpayers will be presented with an end-of-year bill for the first time but this number will decrease over time as Inland Revenue starts using its data to make sure its customers are on the right tax code and paying the right amount of tax.
Mr Owen says Inland Revenue acknowledges there's a lot of change to process but most people will be paying and receiving the right amounts without having to do anything.
"That's the whole point of these changes – to make tax simpler and more accurate for all New Zealanders and payday filing is a big part of that."