Change to ESCT Processing for Payroll

Payroll  New Zealand


Finance Version  2011.2.0.128

PCSchool has seen a need to alter the mechanism by which we calculate the ESCT tax deduction associated with Superannuation in New Zealand. In 2012 the IRD changed the method of calculation and we have made the changes to fall  in line with this. The calculation is based on a percentage deduction the rate determined by either a prior knowledge of the annual earnings for the previous 12 months, or on an estimated annual earning by extrapolating the current pay over a full year. This extrapolation has caused some inconsistencies where employees have varying earnings from on fortnight to the next and where ESCT is reported on a fortnightly basis. In the current version of PCSchool Payroll this calculation is performed at month end and the figure produced here may be at variance to the figures produced in individual fortnights. To avoid this we have change the calculation to a fortnightly basis and am now storing these calculations as transactions. When the IRD345 calculations are done they will merely collect the transactions for the pays through the month. This ensures consistency and also a permanent record of the calculation associated with individual pays.

In light of the new method of storing this data we have had to make some alterations to some of the payroll reports.

If an SQL School Download new SQL reports here  Extract the files to \pcschool\reports\sql on your server

If a Non SQL School Download new NON SQL reports here  Extract the files to \pcschool\reports on your server

For the most consistent calculation of ESCT you can record the estimated annual earnings of the employee over the previous 12 monts. This figure will be used to calculate the rate used in the ESCT calculation. This method is best used for employees where their wage per pay varies from pay to pay.

Setting an annual salary

As an interim measure we have provided you the means to recall pays for the year to date, since April 1st and to have PCSchool create the new ESCT Payroll transactions on these payments. This will ensure that the new reports will be able to find suitable transactions for these pays that preceeded this change. This method is only an interim measure and only needs to be performed on pays run prior to installing this update. Pays generated in the future will have the ESCT automatically calculated.

Creating Back dated ESCT transactions

Reports will now be based on the actual ESCT transactions stored and you will be able to review or report on these transactions. Should you wish to have your customized payslips altered to show the ESCT calculated you will need to contact to get your report altered.

Review ESCT as a Payroll Transaction

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