If a new employee gives you an opt-out notice any time after their first pay, any KiwiSaver deductions that have been made in the current month may be refunded to the employee. The Inland Revenue Department (IRD) will automatically refund any deductions that have already been reported to the IRD on the Employer Monthly Schedule for prior months.
Employees will only be refunded for the employee's portion of the contribution, and the employer will be refunded the employer's portion of the contribution.
The first decision you have to make is:
- Are you going to let the IRD refund the KiwiSaver deductions?
- Are you going to refund the KiwiSaver deductions to the employee?
If you choose No. 1
then there is no action required in Payroll, although employees will have to wait until after the current month's Employer Monthly Schedule is filed before receiving their refund from the IRD.
When you file the EMS, the IRD is advised that the employee has opted out. For example, an employee starts work on the 2nd April and KiwiSaver deductions are made from the employee's wages. They opt out on the 7th of May. You file your EMS for May on the 20th of June. The IRD will then refund the employee's KiwiSaver deductions to the employee and any employer contributions to your KiwiSaver account.
If you choose No. 2
You can refund the May KiwiSaver deductions in the employee's next pay in May. The April deductions will be refunded by the IRD after the Employer Monthly Schedule has been filed in June with any employer contributions being refunded to your employer's KiwiSaver account at the IRD. If any KiwiSaver deductions for the 'current' month are being refunded, these need to be processed, either as a separate pay or in conjunction with the employee's next pay as below.
- Go to the Maintenance command centre and click Maintain Employees.
- Click Select Employee.
- Click the relevant employee then click OK.
- Establish the KiwiSaver deductions requiring refunding, noting the 'Gross' amount that was used in the KiwiSaver calculation, in other words $561.60 @ .02 = 11.23
Original pay as viewed in the Pay History tab
The refund can be carried out in either a current pay or separate pay following the instructions below.
- Go to the Prepare Pays command centre and click Enter Pays.
- Double-click the applicable employee.
Within the Quantity field enter as a negative amount the 'Gross' amount that was used in the KiwiSaver calculation (as established above).
Processing in the current pay
As shown in the above screenshot, by reversing the KiwiSaver deduction in the current pay the KiwiSaver is added back on to the pay after PAYE is deducted.
Processing in a separate pay
Reversing the KiwiSaver deduction as a separate pay would correctly create a negative pay (as shown in the above screenshot).
- Continue processing the refunding pay the same as you would for any normal pay, in other words printing the Pay Summary, taking a backup then finalising the pay.
- After the refund pay has been finalised, select the Opted out option on the Compulsory Deductions tab in Maintain Employees.
You will have now successfully processed the KiwiSaver refund through MYOB Payroll as required and opted your employee out of KiwiSaver.