Employers are required to lodge an IR348 Employers Monthly Schedule with Inland Revenue once a month, showing details of all tax deductions made.
If you do not deduct tax from an employee, contractor or company, the IRD does not want their details shown on the IR348.
Contractors or Companies
If you deduct withholding tax from a contractor or company, then the contractor or company must be shown on the IR348. If no withholding tax is deducted, the contractor or company is to be excluded from the IR348.
Some clients use Ace Payroll to regularly transfer money to a director by way of drawings, with no tax deducted. In these cases the director takes responsibility for paying their own tax using the provisional tax system. If no tax is deducted, then the director's drawings are not to be shown on the IR348.
Note that some company directors prefer their drawings to be taxed at the source, using the PAYE system. If tax is deducted in this manner, then the payments to the director are required to be shown on the IR348.
- From the front screen click Employee > Modify Employee Details > Personnel.
- Click Exclude From IR348.
- The Exclude From IR348 window opens. Click Exclude From IR348 window opens.
You may want to set the employee tax code to NIL. To do this, click the Taxation tab, click the Tax Code, then scroll down and click NIL Zero Tax.
If any tax is deducted from the employee during the month, Ace Payroll includes the employee on the IR348 regardless of the above settings.