Explanatory note
This note is not part of the regulations, but is intended to indicate their general effect.
These regulations, which come into force on 1 April 2019, are made under section 23N of the Tax Administration Act 1994 (the Act).
Section 23N is in subpart 3C of Part 3 of the Act. Subpart 3C will be inserted into the Act on 1 April 2019 by section 275 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018. Subpart 3C sets out a new regime for how employers will provide information to the Inland Revenue Department (the IRD) about their employees’ income and the PAYE deductions that are made from that income. This information is called employment income information and will be provided for each payday of the employee.
Section 23N allows regulations to be made about how errors in an employer’s employment income information for a payday may be corrected. In summary, these regulations provide for 2 main things as follows:
the nature and types of errors that are able to be corrected by an employer:
the manner in which errors in employment income information may be corrected.
Nature and types of errors that are able to be corrected by an employer
These regulations apply to the following types of errors:
payroll overpayment errors that arise when an employee is overpaid and correcting the overpayment requires consequential change to the amounts withheld for PAYE and related deductions such as KiwiSaver (regulation 4):
interpretation errors that arise when the employee receives the correct pay but an incorrect tax treatment is applied (regulations 5, 6, and 7):
reporting errors that arise when the employee was paid and taxed correctly but reporting to Inland Revenue does not accurately reflect what was paid or withheld (regulation 8).
However, the regulations do not generally apply—
to payroll corrections for underpayments:
where an error is the result of an incorrect tax code being provided by an employee (regulation 11).
Manner in which errors in employment income information may be corrected
Broadly speaking, once the type of error has been established, the relevant regulation provides for options for correction. The 2 main options are as follows:
same payday correction, ie, correction by amending the employer’s employment income information for the payday in which the error is made (these are the options that refer to regulation 10):
later payday correction, ie, correction in the employer’s employment income information for a later payday.
An employer must correct an error as soon as is reasonably practicable after the employer becomes aware of it (regulation 9).
Regulation 10 provides for the manner in which a person may notify IRD of the correction of certain errors in the employer’s employment income information for the same payday on which the error is made. The options are as follows:
by electronic means, if the person complies with Part 4 of the Contract and Commercial Law Act 2017:
in print and delivered in a way referred to in section 14F of the Tax Administration Act 1994:
in another manner permitted by the Commissioner.
Regulatory impact assessment
The Inland Revenue Department produced a regulatory impact assessment on 7 February 2018 to help inform the decisions taken by the Government relating to the contents of this instrument. This was updated on 28 February 2019.
A copy of this regulatory impact assessment can be found at—
https://taxpolicy.ird.govt.nz/publications/type/regulatory-impact-assessment
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 28 March 2019.
These regulations are administered by the Inland Revenue Department.