Impact of payroll giving tax credits on some reports (New Zealand)

Payroll Giving provides employees with an option to make donations directly from their pay to approved donee organisations. For every dollar an employee donates, they will receive a third back as a tax credit in the same pay period.

Payroll Giving donations can only be made to donee organisations that have Inland Revenue-approved donee status.

When an employee has a Payroll Giving deduction processed in a pay, the PAYE figure will reflect the tax credit relative to the amount of the Payroll Giving deduction while some reports will also show the specific tax credit figures.

In the pay being processed the PAYE field will show the lower amount. The normal PAYE for that pay has had the Payroll Giving tax credit applied so the field is now showing the "net PAYE" figure.

Reports such as the Paysheet and Trial Balance only show the "net PAYE" figure for the pay and have no details regarding the Payroll Giving Tax Credits.

In the Payslip reports the PAYE amount reflects the "net PAYE" figure, along with a line for the Tax Credits for the Payroll Giving Donations which shows the amount of the tax credits determined for that pay.

When doing the IRD reports each month the IR345 and IR348 reports reflect the Tax Credits as follows:

IR345 - The "PAYE (incl. tax on scheduler payments)" item reflects the net PAYE figure after the tax credits have been applied.

IR348 - The "PAYE/Schedular tax" column shows the original PAYE figure (before the tax credits are applied). A "Tax Credits for Payroll Giving" column is added to the right side of the report which shows the amount of tax credits for each employee.

Subtracting the total of the "Tax Credits for Payroll Giving" from the total of the "PAYE/Schedular tax" will give the amount of "PAYE (incl. tax on scheduler payments)" that appears on the IR345 report.

For more information on setting up Payroll Giving deductions, click here.

For more information on activating Payroll Giving deductions, click here.

For more information on setting up Payroll Giving Donee Organisations, click here.

For further information on processing Payroll Giving deductions, click here.

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.