Our advice to employers regarding the Payroll Giving scheme (Give as you earn)

This scheme is voluntary as far as employers are concerned, so you don't have to adopt it, but it is certainly a good feature to offer to your employees, and should really benefit charitable organisations in boosting their funds to help them in carry out their good work in the community.

Also, this scheme can only be adopted if you file your IRD Reports electronically, rather than sending in the forms manually.

If you do not have use a computerised payroll system or use a payroll bureau that can handle 'Payroll Giving' this scheme will be very difficult to manage. For those of you who want to process your payroll yourselves and are still using a manual system, we recommend that you seriously consider purchasing a good computerised payroll system or use a reputable on-line payroll system. Both of these options are inexpensive and will take the hassle out of many payroll processes such as calculating holiday pay, KiwiSaver, and now Payroll Giving.

The IRD has provided some suggestions as to how you could operate the Payroll Giving scheme in your work place. However, one very important aspect of the scheme is that "you decide how to run payroll giving in your work place" so we suggest you make sure you run it in a way that causes you the least amount of problems or stress.
We suggest you adopt the following rules...

• Only allow your employees to donate in the same frequency as their wages/salary. i.e. if they are paid weekly, they can only donate weekly, if they are paid fortnightly, they can only donate fortnightly, etc.
• Make it clear to your employees that while changing their charity and/or their amount of donation is permissible, this is not encouraged as it creates considerable extra work. So regularity is encouraged.
• Limit the total number of charities that each employee can donate to (we suggest just one, but possibly extend it to two), but allow them to donate to whichever charity they wish. People are very passionate about whom they donate their money to, so restricting their choice of charities by providing them with a short list will likely be resented.
• So, to summarise, we recommend that each employee be allowed to donate to any one or any two charities of their choice, a regular amount on a regular basis, in the same frequency as they get paid.

Other comments regarding the scheme

• Although IRD has placed the primary responsibility on the employee to check that their chosen donee organisation is on the IRD's approved list, we strongly recommend that you check this yourself because if they are later found to be not on the list, it's the employer that has the task of making adjustments for past non-qualifying donations. We also suggest you check with the organisation concerned that the bank account number quoted is correct. Retrieving money that has been paid into an incorrect account can be a harrowing experience. The specific forms that are offered for download here will facilitate this process. The forms for specific organisations have already had their bank account details verified.
• We further suggest that you automate the process of sending the donations to the donee organisations. This can best be done by using a payroll system that allows you to link the deduction from the employee's pay to the payment to the donee's bank account. This way, you don’t need to reconcile what you owe. It will be deducted and paid out all in the same payroll processing.

We strongly feel that you should make this new scheme work for you and the country in a positive manner, not allow it to tie you down and potentially create dissention in the work place.

As mentioned earlier, the basic principle of this scheme is very sound and has a lot of merit, but from an employer's perspective, unless you are confident that you fully understand the scheme and have the rules and systems in place to ensure it runs smoothly and harmoniously, we suggest you be very wary about introducing it into your work place.

Our policy

As a payroll bureau, the above guidelines are what we will be recommending to all our clients, and we will provide this service at little or no additional cost.

If we can be of any assistance in advising you further, please do not hesitate to contact us.

Phone (09) 271 2275    or    email   info@acebs.co.nz