1. Australia / New Zealand Payroll Implementation Guide
  2. Understanding Schedular Payments

Understanding Schedular Payments

Due to recent changes in the withholding tax deductions, employers are now required to track and report regular pay along with the schedular payments. The employer monthly scheduled IRD file creates two records. One record represents the regular payment with the PAYE and the second record represents the gross schedular payment, earnings not liable, equal to the schedular payment plus the tax along with the tax code WT. This is applicable to all tax scales.

The gross amount of schedular payment and tax deducted is identified separately from normal gross pay and PAYE deducted. If you have an employee who receives both salary or wages and schedular payments, you can identify the amount of schedular payment and the normal salary and PAYE when you create the employer monthly schedule.

For example, if an employee gets a normal salary under the tax code M as well as schedular payments, you have two lines for the employee on the employer monthly schedule. One line shows the salary and PAYE with the tax code as M and the second line shows the gross schedular payment, earnings not liable for earner levy should be equal to gross schedular payment, and tax with a tax code of WT.

Before processing the schedular payment, you set up the tax information for the schedular payment. Tax information setup includes:

  • Adding tax input numbers 4, 5,7,8,9 to calculate schedular payment using the Tax Calculation Rules program (P75A0004).

  • Adding tax rules WT (Withholding tax) and WD (Non-Declaration tax) to the existing tax scales M, ML, ND and so on.

  • You must set up the tax area records for FEDERAL WT and WD. You use the Tax Area Information program (P069012) to enter these records.

After entering schedular payment information, you can process the employee through standard payroll processing. When you run the Write NZ IR File and Report program (R75Z0006) to report wages and taxes to the IRD, this report prints new record for schedular payments, based on the Payment File table (F07350) and Tax Detail File table (F07353), and writes tax ledger in the New Zealand Tax Ledger Detail table (F75Z0002).