The IRD has altered the requirements associated Student Loan deductions and has removed the ESCT Exemption associated with Employer Contributed Kiwi Saver

For details of the IRD changes see  the Payroll Specification Document – Final V2.00

If you intend to apply this followup it is important that you have produced you IRD 345 and associated file for payrolls up to 31/3/2012 prior to installing the followup. This will ensure that the Kiwi Employer Super will not have ESCT applied to the initial 2%. Once this report and file has been produced then install the followup.

Changes to Student Loans

Employees can now elect to accelerate their Student Loan deductions as a % rate of their gross income. This option is only available to employees currently with the standard Student Loan deduction. The additional deductions can be from 1 to 5%, and is referred to as “SLCIR”. Contributions to this additional deduction must be tracked and reported separately in the EMS file submission. There has been a new field created in the employee record for this purpose.

Assigning SLCIR additional deductions

Employees may also elect to has an additional $ amount deducted from their pay and apply this to additional Student Loan payments. This is referred to as SLBOR and it too needs to appear separately in the EMS file submission. There has been a new field created in the employee record for this purpose.

Adding additional SLBOR as $ value

The IRD has initiated legislation that enables them to set an alternate rate for the collection of Student Loan from a specific employee. As shipped PCSchool has a single Student Loan Rate Table ie SFSS where the rate is 10 % provided the weekly threshold of $367 has been reached.

Standard Student Loan Table

If the IRD issues alternate rates for a specific employee then this rate will need to be established as a table under the headings of either:

SFNTFE, SFSSFE or SFSSNT

Setting up an alternate Student Loan Table

For specific employees, where advised by the IRD, these alternate rate tables can be selected in the Employee View.

Selecting alternate Student Loan Rate Table

the tax calculations as below:

Displaying student load deduction types

Changes to ESCT deductions and Employer Kiwi Saver

Previously the IRD allowed an exemption from ESCT  for the initial 2% of Employer contributed Kiwi Saver. This has now been removed and the ESCT will be calculated on the full amount.  While the PCSchool calculations now take this into account the IRD has also given the option enabling employees to elect to have this employer contribution to be added to standard salary and taxed accordingly. This method enables the Kiwi Saver contribution to be submitted to IRD as a gross amount as an Employee contribution in that the tax has ablreay been paid as part of the standard pay run.

To enable the automated processing of this latter option PCSchool has created a new type of Superannuation deduction namely KIWI/EMPT

Selecting the desired types of Superannuation

If employees elect to have their Employer Kiwi Saver added to normal pay and taxed accordingly, then they need to change the super type from KIWI/EMP  to KIWI/EMPT

The way that PCSchool handles this type of KIWI/EMPT is to give the employee an Allowance Before Tax (AB) equal to the % or $ rate specified (in the diagram above 3%). The employee will also be assigned a Deduction After Tax (DA) of the same amount. While these two additions will cancel out, so that the actual take home pay will not be impacted, the fact that one is an allowance Before Tax will increase the gross pay by this amount prior to the tax calculation being performed. This will increase that tax paid on the payroll. The subsequent Kiwi Saver deduction is assigned and reported as Employee contributed.

Payroll Preparation Report

Important: If using SLCIR or SLBOR you may find that some payroll reports are not sensitive to these new initiatives. If this is the case then contact the Help Desk to arrange for your reports to be modified.

If you intend to apply this followup it is important that you have produced you IRD 345 and associated file for payrolls up to 31/3/2012 prior to installing the followup. This will ensure that the Kiwi Employer Super will not have ESCT applied to the initial 2%. Once this report and file has been produced then install the followup.