In November 2015, the Government released the fourth document in a series of discussion documents for public consultation planned for the next few years to support consultation on the Government’s proposals for modernising and simplifying tax and social policy administration in New Zealand.

The fourth consultation, “Making Tax Simpler - Better administration of PAYE and GST” (the discussion document) outlined proposals to design digital services for PAYE and GST that will integrate tax requirements into tasks that people would already be doing as part of running their business, such as running their payroll.

The summary of the simpler PAYE reporting is:

• Employers and payroll intermediaries would no longer be required to file an employer monthly schedule; instead they would file PAYE information on a payday basis from 1 April 2019.

• Employers using payroll software would be able to file their information directly from their payroll system.

• Employers would not be required to use payroll software but would have to file their PAYE information on a payday basis.

• The smallest employers would still be able to file their PAYE information on paper if they choose to do so. The threshold for electronic filing of PAYE information would reduce from $100,000 a year of PAYE and Employer Superannuation Contribution Tax (ESCT) deductions to $50,000 a year.

• The Government is not proposing to change the dates by which PAYE and related deductions must be paid to Inland Revenue. However, employers will be able to make these payments on payday if they choose to.

• To improve the workability of the rules minor changes would be made from 1 April 2018 to the PAYE rules for holiday pay paid in advance and to align when rate changes come into effect.

• The payroll subsidy, which subsidises employers to outsource their PAYE obligations to listed payroll intermediaries, would cease from 1 April 2018.

The proposed changes are likely to be included in a tax bill for consideration by Parliament in 2017.