Employee Record Setup for New Zealand Employees

As with employees from other countries, you can update the employee records for employees from New Zealand in the People feature. For more information about setting up employee records, see Payroll Administration: Employee Records in the Dayforce Implementation Guide.

For information specific to setting up employee records for New Zealand employees, see the following topics:

• Overview of Tax Definitions
• Add Direct Deposit Information for New Zealand Employees

Overview of Tax Definitions

Inland Revenue (IR) is the New Zealand public service department that collects tax and disburses payments for social support programmes. In Dayforce, you can set up the tax definitions for New Zealand employees to define the compulsory contributions and levies on employee income for submission to IR.

You can set up, view, and update employee-level tax definitions in the Payroll > Tax Definitions screen of the People feature. This screen includes the following sections:

• Federal Tax Info
• Employee Tax Definitions

Federal Tax Info

In the Payroll > Tax Definitions screen of the People feature, tax records in the Federal Tax Info section determine how much tax is withheld from payments made to the employee. An active record must be present in this section for the application to calculate an employee's pay.

If there is a change to an employee’s tax information, it is recommended that you end date the current record and create a new record.

By default, the Active filter is selected and only the active tax record is displayed in the list, but if needed, you can click All to also include inactive records for an employee.

The Federal Tax Info section contains the following sections:

• General (which also includes the Employee Tax Code drop-down list)
• Student Loan
• Special Tax Rates

General

In the General section, you configure the effective start and end dates and the tax code used for the selected tax definition.

General parameters for tax definitions

Parameter	Description
Effective From	Enter the start date when the tax record can be used in Dayforce.
Effective To	(Optional) Enter an end date when the tax record is no longer effective in Dayforce.
Employee Tax Code	In the drop-down list, select one of the following tax codes: M—Main income ME—Main income - Independent Earner tax Credit (IETC) NSW—Non-residual seasonal workers income. Flat tax. There are no thresholds. SB—Secondary income that is less than or equal to the lowest limit. S—Secondary income from the middle limit. SH—Secondary income from the middle to high limit. ST—Secondary income above the highest limit CAE—Casual Agricultural Employees EDW—Election day workers M SL—Main Income with Student loan ME SL—Main Income with Student Loan SB SL—Secondary income up to the lowest limit (with student loan) S SL—Secondary income from the middle limit (with a student loan) SH SL—Secondary income from the middle to high limit (with Student Loan) ST SL—Secondary Income over the highest limit ND—No notification rate (use if no IRD number or tax code was applied). STC—Special tax code from IR 23 Note: When you select a main income with student loan (that is, tax codes with M SL or ME SL) the STC/WT field in the Special Tax Rates section is grayed out.

Student Loan

In the Student Loan section, you can configure the tax definition settings that are related to New Zealand student loan information.

Note: These settings are only enabled when you select a certain tax code

Parameters for student loans

Parameter	Description
URT Special Deduction Rate	If a borrower has more than one employer at the same time, and gross income from their main employment is below the pay period repayment threshold, the borrower can apply to IR for an Unused Repayment Threshold Special Deduction Rate (URT SDR) to have the “unused” portion of the pay period threshold allocated to secondary employers. For eligible employees, enter a percentage enter a percentage within the allowable range (for example, from 0% to 11%) for the (URT SDR).
Commissioner Deduction Balance (SLCIR)	Commissioner deductions are extra deductions that might be required if the student loan standard deductions were less than the amount that should have been deducted. In this case, the IR sends a notification to the borrower and their employer to specify the recovery amount and the deduction percentage required until that amount has been reached. Enter a cash balance of commissioner deductions as specified by the IR notification. This balance doesn’t display the reduced balance after each pay period. However, this information is stored in the backend tables for reference and calculation.
Commissioner Deductions Rate (SLCIR)	Enter the percentage of the commissioner deduction rate as specified by the IR notification to the borrower and employer.
Voluntary Deduction Value(SLBOR)	Enter a cash or percentage value to indicate an extra deduction as requested by employees who want to pay more towards their student loan.
Voluntary Deduction Type (SLBOR)	Select Percent or Amount to define the value Voluntary Deduction Value (SLBOR) field.
Special Tax Student Loan Rate	For eligible employees, enter the special rate for a student loan (such as M SL, ME SL, S SL, SB SL, SH SL, ST SL) that was provided by the special deduction rate certificate.
Special Tax Rate Include Threshold	Select this checkbox if the special tax rate includes a threshold limit.

Special Tax Rates

In the Special Tax Rates section, you can update the percentage rate of the Special Schedular tax code rates. These tax codes calculate PAYE amounts as defined in the tax code declaration IR330 form.

Note: The Special Tax Rate section is only editable when you select STC or WT as the employee tax code.

Special Tax Codes

There is an option to have tax or student loan repayments deducted at a flat rate. Student loan deductions consider the repayment threshold where the flat rate applies to income above the repayment threshold.

The special tax code/special deduction rate certificate (IR 23) deducts Pay as You Earn (PAYE) at the rate of XX cents per dollar. (XX =>rate on certificate). This amount includes the earner’s levy.

The special tax code/deduction rate can only be used if the certificate covers some or all of the period from 01/04/2019 to 31/03/2020 or longer.

If the employee also has a student loan, the certificate includes the rate to deduct student loans. If the employment is the main source of employment income, the rate applies to income above the pay period repayment threshold, for example, $380 per week. If the income is from secondary employment, the threshold does not apply.

Schedular Payment Provisions

Student loan deductions, KiwiSaver deductions and contributions, and the ACC Earners’ Levy do not apply to schedular payments (tax code WT).

With changes that became effective on 1 April 2017, most contractors can elect their own WT tax rate (no lower than 10%), and won’t need to apply for an STC. However, in scenarios where the WT rate needs to be lower than 10%, an STC certificate is still necessary.

Parameters for Special Tax Rates

Parameter	Description
STC/WT Tax Rate	The Special Tax Code (STC) rate applies when using the other tax codes will result in too much or not enough tax being deducted. IRD approval is required before you can use it. Withholding Tax (WT) refers to schedular payments that are specifically for contract work (non-regular), and workers who are non-salaried or not employees. The STC/WT Tax Rate field is grayed out if you select a main income with student loan (that is, M SL or ME SL) in the Employee Tax Code field.
Elected Tax Rate for Lump Sum pay	Lump sum payments, also called extra pay, include pay such as: Annual or special bonuses Cashed-in annual leave Retiring or redundancy payments Payments for accepting restrictive covenants Exit inducement payments Gratuities (tips) Back pay Back paid holiday pay Lump sum holiday pay Employee share scheme benefits – if you choose to deduct tax In Dayforce, you can include the gross pay levels and percentages to calculate income tax amounts that are withheld from employees receiving a lump sum payment for either primary or secondary incomes. To calculate PAYE amounts for primary and secondary incomes, select a percentage in the Elected Tax Rate for Lump Sum drop-down list to specify the tax rate for the lump sum payment.

Employer Superannuation Contribution Tax (ESCT)

ESCT is a withholding tax on KiwiSaver payments made by the employer on behalf of an employee. ESCT is only paid on voluntary contributions. The ESCT rate is driven by an employee's previous year earnings. The calculated percentage for ESCT rates (that is, 10.5%, 17%, 30% AND 33%) are based on an employee's income bracket and is used in the KiwiSaver calculation to reduce the amount of the employer KiwiSaver contribution. ESCT is still paid to IRD, so the overall cost to the employer is the same.

In the ESCT fields, you can update the ESCT percentage rate and its effective dates.

Parameters for ESCT fields

Parameter	Description
ESCT Rate (%)	Drop-down list to select the ESCT withholding tax rate as a percentage (that is, 10.5, 17.5, 30, 33.0, 39.0, or System Calculated) which is deducted from employer contributions to employees’ KiwiSaver on voluntary funds. The correct rate of ESCT to apply to each employee is based on the employee’s marginal tax rate. If the employer is making contributions while the employee is on a Savings Suspension, Dayforce keeps the ESCT rate as indicated in this field.
ESCT Effective From	The start date when Dayforce begins the ESCT rate calculation.
ESCT Effective To	The end date when Dayforce stops ESCT rate calculation.

Payday Filing

By default, after a new hire is included in the ED file at the end of the employee's first committed pay run, Dayforce automatically sets this option to exclude the employee until there are changes to either one of the following events:

• KiwiSaver
• Tax definitions such as Tax code and Student loan
• Termination

Do not select this checkbox if the employee is a new hire. If there are no changes to an employee’s information, you can choose to exclude an employee from the Payday Filing - Employee’s Details (ED) file by selecting the Exclude from Employee Details (ED) file checkbox.

Suspend an Employee's Savings for a Fixed Period

When an employee provides formal evidence from the IRD using the KiwiSaver Opt-out or Savings Suspension Form or directly with the payroll team that they're taking a savings suspension for a certain period, employers can record the effective start, end dates and any employer contributions to determine if Dayforce will pay Employer Superannuation Contribution Tax (ESCT) tax to the Inland Revenue Department (IRD). Payroll administrators can record an employee's savings suspension for a fixed period of time in the Payroll > KiwiSaver screen of People by selecting the SS - Savings Suspension option in the Status drop-down list for both new or existing enrollment types.

To suspend an employee's savings for a fixed period:

1. Go to People, open the employee profile, and click Payroll > KiwiSaver.
2. Click Add.
3. Select the start date when the savings suspension becomes active in the Effective From and optionally, the savings suspension end date in the Effective To fields.
4. In the Enrollment Type drop-down list, select if the enrollment is for a new or existing employee.
5. In the Status drop-down list, select SS - Savings Suspension.
6. In the Savings Suspension Reason checkbox, enter a reason for the savings suspension.
7. In the Employer Compulsory Contribution Rate(%) and Employer Voluntary Contribution Rate(%) field, enter the values as a percentage if you elect to keep making KiwiSaver contributions as a percentage.
8. In the ESCT Rate (%) field, optionally enter the ESCT rate as a percentage that you want to maintain while on the savings suspension.
9. Click Save.

Employee Tax Definitions

The Employee Payroll Tax section is a read-only section. No action is required.

This section displays columns that identify the following:

• Tax Authority
• Tax Type
• Tax Name
• Description of the tax (for example, Federal)
• Whether the tax is an Employee Tax or Employer Tax
• The associated legal entity that administers the employee payroll.

Add Direct Deposit Information for New Zealand Employees

You can enter employee banking information for New Zealand employees in the Payroll > Direct Deposit screen of the People feature.

For general information on adding direct deposit records, see Payroll Direct Deposit Information.

Parameters for New Zealand direct deposit

Parameter	Description
General Details
Priority	Select an option to specify the priority of the payment order (such as 1, 2, and so on) if multiple accounts exist.
Deposit Type	Select an option to specify whether payment to the account will be made by percent or amount.
Remainder	Select this checkbox if the remaining amount is to be paid to this direct deposit record.
Deposit Amount	(Only available if the Remainder checkbox is cleared). Enter the percentage or monetary amount to be paid to the account.
Special Disbursement Account	Select this checkbox to designate this direct deposit account as a special disbursement account to receive the employee's net pay. Note: You can select this checkbox for only one active direct deposit account. If you try to select the checkbox for more than one account, the application generates an error message.
Banking Details
Bank Code	Enter the six-digit bank branch code of the financial institution of the account.
Account Number	Enter the account number for the direct deposit.
Branch Name and Location	This field is read-only and displays the name and location of the financial institution used for the direct deposit. This value is auto populated when you enter a valid Bank Code to identify the bank or financial institution.
Account Holder	Enter the name of the individual who is associated with the account details.