Thursday 18 September 2008 Bruce Mason Centre, Auckland

1. Thursday 18 September 2008 Bruce Mason Centre, Auckland

2. Our presentation will cover: • Standard Business Reporting (SBR) • Changes to KiwiSaver • Our Payroll Giving and Recognised Seasonal Workers projects • How we work to better understand our customers through our Customer Insight unit • Our ir-File demonstration tool • Our Employer Monthly Schedule (EMS) Business Optimisation project and high level objectives • Our relationship with payroll software developers

3. Standard Business Reporting (SBR)

4. Standard Business Reporting (SBR) Standard Business Reporting • SBR is a multi-agency programme aimed at reducing compliance costs for businesses who report financial information to Government. • Inland Revenue, ACC, Statistics New Zealand and Ministry of Economic Development are involved in rolling out SBR.

5. How will SBR help? • SBR will streamline reporting by: • Removing the need to complete unnecessary forms and provide duplicate information. • Using PC-based software to send financial information directly to Government. • Reducing the need for businesses to submit the same or similar information to multiple Government agencies.

6. Standard Business Reporting (SBR) Benefits to businesses The benefits of SBR are: • Saving time, effort and money. • Making reporting simpler. • Reducing the need to outsource complex tasks to people such as accountants. • Providing access to up to date financial information. • Sharing financial/accounting data more easily. • Reducing the amount of reporting.

7. Standard Business Reporting (SBR) Consultation • We’ll interview affected businesses, intermediaries and not-for-profit organisations to help determine reductions in compliance costs. • We’ll consult with software developers to identify their requirements and to clarify any areas of burden for their clients. • We meet with the government agencies who are involved in rolling out SBR to determine costs and likely impacts.

9. KiwiSaver (KS) KiwiSaver ESCT issue • We’ve identified an error in the payroll specification for calculating Employer Tax Credit (ETC). • This relates to the Employer Superannuation Contribution Tax (ESCT), formerly SSCWT. • The revised specifications were issued to all Payroll Developers on Wednesday.

10. KiwiSaver (KS) KiwiSaver ETC square-up • The Taxation [ International Taxation, Life Insurance and RemedialMatters] Bill proposes a change to allow the annual square up of Employer Tax Credit [ETC]. • This bill is currently with the Select Committee.

11. Consultation We’ve sought feedback on the ETC square-up from: • Employers • Employer groups • New Zealand Institute of Chartered Accountants • Payroll developers • Council of Trade Unions.

12. Timing of enactment • Application date is 1 April 2009 for annual square-up. • We’ll keep you informed of the progress of the legislation.

13. Payroll Giving & Recognised Seasonal Workers

14. Payroll Giving & Recognised Seasonal Workers Introduction • The Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill introduces several sections that currently result in a new calculation for some tax codes, and adds a new tax code. • Two initiatives from this Bill are: • Payroll Giving • Recognised Seasonal Workers. • These take effect on 1 April 2009 and we’ll will keep you updated on progress.

15. Payroll Giving & Recognised Seasonal Workers Payroll Giving • Payroll Giving introduces a new calculation that provides a PAYE credit to an employee who has made a donation to a (registered) charity via ir-File. • Payroll Giving is voluntary - employers and employees don’t have to participate. • Penalties are not applied to an employer or employee if they decide not to participate in Payroll Giving. • The tax credit is calculated each pay period. • A tax credit can’t be more than the amount of tax for the person’s PAYE income payment for the pay period.

16. Payroll Giving & Recognised Seasonal Workers Payroll Giving Example • The following example from the Commentary on the Bill, illustrates how Payroll Giving may operate. • The employee receives $400 per week and makes regular contributions of $10 each pay. The employee is on a 19.5% tax rate. • In this example, the employee will receive an immediate tax benefit of $3.33 on their $10 payroll donation. The employer must transfer the payroll donation to the chosen donee organisation within a three-month period.

17. Payroll Giving & Recognised Seasonal Workers Recognised Seasonal Workers • There will be a new tax code for Recognised Seasonal Workers. • The tax rate will be flat (consisting of specified tax rate and an ACC earner’s premium). • There will be no thresholds or rebates applied to the tax code. • seasonal workers aren’t required to file a tax return.

18. Role of Customer Insight

19. Role of Customer Insight & ir-File Demonstration Tool Role of Customer Insight • Developing and communicating a deep understanding of our customers. • Relationship management at a local, regional, national and international level. • Delivering customer education that increases understanding of customer entitlements and obligations.

20. ir-File demonstration tool

21. Role of Customer Insight & ir-File Demonstration Tool What’s the ir-File demonstration tool? • An interactive training tool to assist customers to file Employer Monthly Schedules (EMS) online. • Covers filing methods, electronic deduction forms, registering employees for Kiwisaver and opting out. • Is available through Inland Revenue’s website from 15 Sept 2008.

22. Role of Customer Insight & ir-File Demonstration Tool How will this tool help? • Employers will have a “real time” experience of the ir-File process. • Employers can either view or choose to interact using examples of different filing methods and registration options. • Provides an opportunity for customers to learn at their own pace and “give it a go”. • A tool for Inland Revenue staff to assist customers by seeing what they see.

23. Role of Customer Insight & ir-File Demonstration Tool Other benefits • Increasing confidence of customers to use Inland Revenue’s electronic services. • Providing opportunities to test updates/enhancements to ir-File with employers. • Offers a learning platform for payroll staff. • Link http://www.ird.govt.nz/help/demo/irfile/

26. Employer Monthly Schedule (EMS) Business Optimisation Project Presented By: Carolyn Ayre – Project Manager

27. EMS Business Optimisation Project Employer Monthly Schedules (EMS)

28. EMS Business Optimisation Project Doing business electronically • We aim to improve theprocessing of EMS – doing business electronically is key to this: • Efficiency gains for employers. • Employees who contribute to KiwiSaver will see funds quicker. • Efficiency gains for Inland Revenue. • Faster processing times, faster error resolution. • Inland Revenue staff can spend more time working with employers, rather than processing returns manually.

29. EMS Business Optimisation Project Key objectives • Assist employers who process their payrolls electronically and file on paper, to shift to filing electronically. • Working with large employers to ensure they always file electronically. • Assist employers to reduce routine errors in EMS. • Encourage new employers to file electronically. • Review the relationship model with Payroll Software Developers.

30. EMS Business Optimisation Project Planned activities • Analyse current research and information within the organisation. • Review of ir-File – usability, documentation, online tutorials. • Development of a marketing strategy and plans. • Consultation with Payroll Software Developers. • Analysis of the Payroll Subsidy Scheme.

31. Software Developers Relationship

32. Software Developers Relationship Purpose of our relationship • A protocol has been agreed by Software Developers and InlandRevenue. • This provides a consultative forum to help facilitate software development that: • Supports Inland Revenue’s strategic direction. • Supports the software developer’s strategic direction. • Reduces the compliance costs for employers. • Makes it easier for employers to comply with their tax obligations.

33. Software Developers Relationship Relationship • Operational: • Managing of daily queries from developers. • Issuing of specifications. • Tactical: • Identifying enhancements that will benefit employers, developers and Inland Revenue.

34. Software Developers Relationship Relationship • Strategic: • Inland Revenue facilitates a bi-annual conference for payroll and e-File developers. • The next conference will be on the 18 and19 October at the Gateway Hotel, Auckland. • The agenda includes: • Key project updates from Inland Revenue that affect developers. • Joint strategic opportunities. • Operational/tactical issues identified by developers. • If you’d like to register for the October conference, please email Melissa.Jansen@ird.govt.nz before 30 September 2008.

35. Software Developers Relationship Relationship – future strategic opportunities • Enhancements to Inland Revenue’s web site and improved communication between Inland Revenue and developers. • Key Inland Revenue projects that will benefit developers and employers. • Continue to build and enhance our working relationship.

36. “Thank You”