This article will guide you through the process of wrapping up the 2022/2023 financial year, generating and notifying your employees' Earnings Certificate and getting ready for the 2023/2024 financial year.

Preparation

1. Preparation

These steps should be taken prior to publishing earnings certificates:

Review configuration data

Ensure employee details are up to date. In particular the employee's email and postal address.  Earnings certificate notifications will be sent to the email address provided in the 'Email' field so it is important the information is correct. However, the earnings certificate can be printed and dispersed manually if required. Additionally, check that the employee's address is complete and correct as this will prevent earnings certificate from being able to be published. A quick way to audit this information is to generate an 'Employee Details Report' and select the relevant display columns to retrieve the information.  If there are any changes made to the employee data then ensure you submit the updated employee data to the IRD via IRD employee details report.                                                                                                                                                                                      

Ensure the employee's tax code is correct. A quick way to audit this information is to generate an 'Employee Details Report' and select the 'Tax Code' display column to retrieve the information.  Again, if there are any changes made to the employee data then ensure you submit the updated employee data to the IRD via IRD employee details report.                                                                                                                                                

Ensure your IRD settings are up to date. You can do this by going to 'Payroll Settings' > 'IRD Settings' page.      

Process and finalise pay run

Ensure that all pay runs are finalised, including any amendment pay runs you had to create.

Please Note:  The date the pay run is PAID determines which financial year that pay run applies to. Earnings certificates generated for the 2022/2023 financial year will only include earnings etc from pay runs paid within that financial year. For example:

• Pay run period ending 30/3/2023, PAID 31/3/2023 will be included in the 2022/2023 financial year.
• Pay run period ending 30/3/2023, PAID 1/4/2023 will be included in the 2023/2024 financial year.

If you want to include every day worked within the financial year, you might have to split a pay run.

For example, a weekly pay run for period ending 1/4/2023, paid 2/4/2023.  Create pay run as normal and set the pay period ending 31/3, ensuring you stipulate date paid to be 31st March. You will then need to adjust the employee hours to reflect the hours worked for the 26th - 31st March and then finalise pay run. Then create another pay run for the period ending 1/4 and adjust the employee hours to reflect the hours worked for the 1st. Then finalise the pay run using the normal date paid, being 2/4/2023. 

Review and submit Payday Filing 

Once all pay runs are finalised, including any amendments, you will need to submit the associated pay run's payday filing employment information (EI) and or employment amendment (EA) to the IRD.

Ensure the payday filing EI and or EA has submitted successfully using Payday filing. If there are any payday filing errors, fix the payday filing errors accordingly, then resubmit the payday filing EI and EA. 

Earnings certificate generation

Once you have completed the steps above, you will be ready to publish the employees' earnings certificate. Please refer to this article for instructions on how to complete this step. 

Prior to publishing earnings certificates, it is recommended that you reconcile the payroll data showing in the earnings certificates with that of the Detailed Activity Report. This will ensure that the data provided to employees is 100% correct. You can export an excel version of the earnings certificate report by clicking on the "Export" button in the Earnings Certificate screen. This will display the data based on your report filters. Then, export the Detailed Activity Report (DAR) using the same reporting period. Grouping the DAR by 'Employee Default Location' will assist in the reconciliation as there will only be one row per employee. You can then compare the total amounts for each component between the two reports. 

Once you are happy, you can send the earnings certificate notifications to the employees they will receive an email notification letting them know that their earnings certificate is available for download, along with a link for downloading. 

2023/2024 financial year 

Once the above 2022/2023 end of year process is finalised, then there are several considerations for the new financial year:

ESCT rate report

Before the start of the new tax year, employee ESCT rates must be reviewed and updated as required.     Please refer to this article for instructions on how to complete this step.                                                             

Information only, ESCT rate threshold for the 2023/2024 financial year:

Tax table updates

For the new financial year, the tax rates for secondary tax codes are as follows: 

*From the IRD: The ACC earners' levy is charged on a maximum amount of income. Any amount of income earned over this maximum isn't liable for the ACC earners' levy. Despite this, for secondary tax codes the ACC earners’ levy is included in the PAYE calculations with no income threshold applied i.e. regardless of the customer’s earnings, the ACC earners’ levy will be deducted as part of PAYE.

The ACC earners’ levy will therefore continue to be deducted when the SA or, SA SL tax code is used. Even though the intention for the use of the SA or, SA SL tax code is for income of more than $180,000, this does not change the inclusion of the ACC earners’ levy. This approach to the deduction is required, as there is no way of assuring that all customers using the SA or, SA SL tax codes are also receiving primary income that is equal to or more than $139,384 (current ACC prescribed maximum income).

The employees secondary income tax code will need to be reviewed and updated accordingly within the employee's profile > Tax code declaration page.

A quick way to audit this information is to generate an 'Employee Details Report' and select the 'Tax Code' display column to retrieve the information.  If there are any changes made to the employee's tax code then ensure you submit the updated employee data to the IRD via IRD employee details report.   

Please note that any pay runs with a date paid of 1/4/2023 or later will use the FY2023/2024 tax tables automatically.           

Please see here for further clarification of the ACC earners levy and SA, SA SL tax codes.

Student loan threshold increase  (Information only) 

The student loan repayment threshold for the new financial year are as per below, and have been automatically loaded (and have been done so already).

Please note that any pay runs with a date paid of 1/4/2023 or later will use the new FY2023/2024 student loan repayment threshold automatically.