Payroll Giving

Payroll giving is a voluntary scheme that was introduced on 7 January 2010. It allows employees to "give as they earn" by making donations directly from their pay to approved donee organisations. For every dollar an employee donates they receive a third back as a tax credit in the same pay period.

See the following IRD web page for more information on payroll giving:

http://www.ird.govt.nz/news-updates/campaign-payroll-giving.html?id=homepage

NOTE: You can only offer payroll giving if you file your IRD returns electronically.

A number of steps are required to set up and use payroll giving with in Exo Payroll. These steps are detailed below.

Step 1: Enable Payroll Giving

To enable payroll giving:

Select Setup Exo Payroll from the Utilities menu.
The Payroll Setup window appears. Go to the Setup Page 2 tab and click the Special Options Setup button.
The Special Options Setup window opens. Enable the Use payroll giving option.
Click Save to exit from all windows.

Payroll giving is now enabled, which means that the various options and features that relate to payroll giving are available.

NOTE: If you enable payroll giving, any Current or One Off Pays that you create after that point will have tax credits automatically calculated for all applicable employees. You should update all of your open pays before setting up payroll giving.

Step 2: Set up Payroll Giving Donees

Any donee organisations that employees want to donate to for the payroll giving scheme must be set up in the Exo Payroll system before donations can be made. Payroll giving donations can only be made to donee organisations that have Inland Revenue-approved donee status. To check if an organisation is an approved donee, visit the following IRD web page:

http://www.ird.govt.nz/donee-organisations/donee-organisations-index.html

You can allow employees to nominate the organisations they want to donate to, or you can provide a list of organisations you have chosen. In either case, all organisations must be set up as Payroll Giving Donees. You can set up as many donee organisations as you want.

Step 3: Create Payroll Giving Deductions

Create a Deduction for each payroll donee:

From the Maintenance menu choose Deductions to open the Deductions window.
Using the first free deduction code, add a new deduction.
Enter a Name that describes the donation, e.g. the name of the donee organisation.
Set the Calculation Method to "Fixed Dollar Amount".
Leave the Amount at zero.
Set the Type to "Payroll Giving".
Select the Payroll Giving Donee that donations will be made to.
Click Save or press F10 to save.

Step 4: Add Payroll Giving Deductions to Employee Pays

Add payroll giving Deductions to employees' Standard Pays if they want to make regular donations each pay period. To make a one-off donation, add payroll giving Deductions to employees' Current Pays.

NOTE: Employees who use the "WT" tax code are not eligible for payroll giving. Do not add payroll giving Deductions to these employees’ pays. (The system does not enforce this restriction.)

To add a Deduction to an employee's pay:

Open the Standard Pay or Current Pay and select the employee you want to set up the donation for.
Click the Deductions button to open the Deductions window.
Click Add or press F4 to add a new Deduction, then enter the Deduction code number you created previously.
Enter the dollar amount to be donated.

NOTE: The donation amount cannot exceed the employee's Net Pay. There is no minimum amount for donations, although you can mandate one if you want to.
Click Save or press F10 on all screens to save.

Payroll giving donations will now be deducted from employee's pay for the relevant pay period(s), and the tax credit will be calculated and added to their pay automatically.

NOTE: The tax credit amount cannot exceed the tax on the employee’s income (i.e. the PAYE amount less the ACC levy). If it does, the tax credit will be reduced to the tax amount. The full donation will still be made, however. Enabling the Eligible for PG optionon Allowances means that they count towards the employee’s earnings for the purposes of calculating the maximum tax credit.

NOTE: If you override an employee's PAYE, they will not receive a tax credit.

NOTE: If you want to use a One-Off Pay to reverse a pay that contains a payroll giving donation, you must reverse the entire pay; you cannot reverse only parts of it (e.g. salary only, Deductions only, Allowances only). You cannot reverse only the payroll giving donation (Deduction).

Step 5: Forward Donations and Notify Donees

After pays containing payroll giving donations have been completed, it is the responsibility of the employer to:

Send donations to the relevant donee organisations.
Advise the donee organisations that donations have been sent to them from a payroll giving scheme.

Use the Payroll Giving Payment Advisory report to determine which donees need to be advised, and how much to forward to each one. This report is available on the Financial tab of the Select Report window.

Donations have to be passed to donee organisations on or before the PAYE payment due date that is closest to the end of the two months from the last day of the pay period when the donation was deducted. See "Passing payroll giving donations to the donee organisation" on the IRD website for examples of how to work out this date.