The IRD’s Payroll Specification Team has advised that the payroll Casebook and the PAYE & KiwiSaver calculator have been updated and are available on the Inland Revenue website.

 

The PAYE & KiwiSaver calculator has also been updated to correct the net Child Support calculation. http://www.ird.govt.nz/calculators/tool-name/tools-p/calculator-paye.html

 

The casebook has been updated to version 1-2 to correct the net Child Support calculation and the ESCT calculation. http://www.ird.govt.nz/software-developers/software-dev-specs/

 

The corrections to these products are described below:

 

Child Support

 

The net Child Support calculation has recently been confirmed as Gross earnings – PAYE (excluding ACC Earners Levy) multiplied by 40%.

 

Example – Page 18 of the Casebook, employee Sara Lucas Pay Period 15/10/10

923.56 – (142.76 – 18.84) =99.64

799.64 * .40 =19.86

 

ESCT

 

The calculation for ESCT in the previous casebook and by the online PAYE calculator was applying the definition of \”each dollar\” (Schedule 1 Part D of the Income Tax Act 2007) at the wrong point in the calculation. We have had this clarified and the term each dollar refers to the final figure before applying the rate of tax.

 

Example – Page 22 of the Casebook, employee Brett Lamb

 

861.85 * 8% =8.95 – 861.85 * 2% =7.24

68.94 – 17.24 =1.70 (truncate to whole dollars here) 51.00 * 33% =6.83