Earnings for an employee with STC tax code appearing under "Earnings not liable for earner levy" on IR348 report (New Zealand)

The IR348 report shows the earnings of an employee for the month in two columns - "Gross earnings" and "Earnings not liable for earner levy (ACC)". The "Gross earnings" column shows the gross earnings the employee has earned in the month, while the "Earnings not liable for earner levy (ACC)" column shows the amount of earnings the employee received that month that are not liable for the Earner Levy calculation.

When doing the IR filing for a company, the earnings for those employees on the STC tax code are showing in the "Earnings not liable for earner levy" column when they should not be. In the document from IRD, the specified STC rate includes the earner levy.

This situation occurs when those employees on the STC tax code have not had their Employee Details set up correctly.

To check the information that has been setup for your employees, follow the steps below. Make sure you know the current Earner Levy percentage before making changes to the tax rates. For the 2009 - 2010 tax year (01/04/2009 - 31/03/2010) it is 1.7%.

To check your employees setup

1. Go to the Employee Maintenance screen.

2. Check the setup for those employees on STC tax code.

As the document from IRD states that the tax rate includes earner levy, the Employee Details screen is setup as above. In the example above the tax rate is 25 cents in a dollar, i.e 25%. Being inclusive of earner levy, the "Add earner levy" box has not been ticked.

The above setup is incorrect.
It should be setup as below:
Tax rate = Total tax rate – Earner levy rate
The “Add earner levy” box must be ticked as shown below:

Tax rate = 25(Tax rate as per IRD including earner levy) – 1.7(Earner Levy Rate) = 23.3
Once set up this way, the employee's earnings will not be displayed in the “Earnings not liable for Earner Levy” column on the IR348 monthly schedule.

Need more help? You can open the online help by pressing F1 on your keyboard while in your software.

You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.