IR348 report's monthly and annual totals do not match each other or other payroll reports (New Zealand)
The IR348 ("Employer Monthly Schedule" or EMS) is a report that New Zealand employers must provide to the Inland Revenue each calendar month (and lists each employee's Gross Pay and tax details).
This report has "From" and "To" date fields, and summarises figures from all pays with "Physical Pay Dates" within the selected date range.
If an organisation wants total figures for one year (such as 1st April to 31st March) then the best option is to manually add up the figures from each month's IR348 reports. Running an IR348 report for the year might seem an attractive option but it would be incorrect and is likely to give different "Gross Earnings" figures (higher than the sum of each monthly report).
Other Payroll reports such as the Paysheet report can also display different totals to an IR348.
These reporting differences can lead to concerns about the accuracy of pay records but the reports are working as intended. Any differences in the reports does not mean that there is a problem with the organisation's records.
See below for possible reasons for the differences.
Differences between monthly and "annual" IR348 reports
Using monthly pays over one year as an example:
In a monthly IR348 report, each employee's "Gross Earnings" for the period are summed then truncated to remove the cents.
- For an employee earning $4000.90 each month, the IR348 reports for each month would show the "Gross Earnings" as $4000.00.
- The sum of the twelve monthly IR348 reports would give a "Gross Earnings" figure of $48000.00 and this is what has been reported to IRD.
If the IR348 report is run for a twelve month period then the "Gross Earnings" for that twelve month period would be summed then truncated to remove the cents.
- For the same employee as mentioned above, the total summed figure for the twelve month period would be $48010.80 which would be truncated to $48010.00 and would appear on the IR348 report as $48010.00. Note: This figure is $10 more than the manually summed figure of the twelve individual monthly IR348 reports above.
An organisation will see a difference between the two "Gross Earnings" figures that will vary dependent on the number of employees in the organisation.
Differences between paysheet and IR348 reports
Using weekly pays over one month as an example:
Within each weekly pay, PAYE is calculated on the "Gross Taxable Earnings" dollars and cents figures. A few cents change in earnings can give a corresponding change in PAYE.
An IR348 report printed monthly includes every pay with a "Physical Payment Date" falling within that monthly date range.
- The PAYE amounts from each pay are totalled then displayed exactly on the IR348 report.
- The "Gross Earnings" from each period are totalled then the cents are "truncated". This means that any "cents" figure is removed and displayed as zero. Note: Truncating is not the same as rounding.
For an employee with four weekly pays of $1000.90 in that month, a Paysheet report would display the "Gross Earnings" as $4003.60 while the IR348 report would display $4003.00 (the truncated total).
Differences between IR348 report and other payroll reports
IRD reports may not match other Payroll reports due to the difference in dates used by the reports.
- IRD reports use the Physical Payment Date
- Other Payroll reports use the Pay Period End Date.
This difference in dates can cause pays to be included in one report, such as the IR348 that is not included in the other reports, such as the Paysheet or Trial Balance. Further information regarding these differences can be found here.
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