Retirement earnings exempt form ACC

CarolJoy
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Retirement earnings exempt form ACC

We are paying out an annual allowance for a retirement package in a weekly wage.  Retirement earnings are NOT subject to ACC so the PAYE should be LESS the 1.39% ACC levy.  I also (presumably) need to let the IRD know that the gross payment is not subject to ACC, and ensure it is earmarked as such for the employee in the IRD records so that they will not be asked for additional tax at the end of the tax  year

 

How do I transact this?  I can override the tax amount (but this will come up as a short payment of PAYE)  I could tax as a one off, (using the Tax Override) and tick that it is exempt form ACC but given the amount crosses the threshold, it needs a combination of the 15.5% and 17.5%

 

I need a way to tax using the progressive tax rates, but exclude ACC

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Steven_M
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Re: Retirement earnings exempt form ACC

Hi @CarolJoy 

 

All gross earning pay codes in New Zealand (Desktop) Payroll are subjected to the ACC earning levy. There is no direct way to exclude a pay code for that ACC earning levy.

 

If you are in a unique situation, where the ACC earning levy is not required, it would a case of manually updating the Tax/PAYE value on the Enter Pays window to be the required amount. 

Note: I have assumed this is their "normal" pay not an extra pay amount which can be exempt from that levy.

Kind regards,
Steven

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CarolJoy
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Re: Retirement earnings exempt form ACC

thanks.  The IRD provides for types of income that are exempt from ACC so it would be nice if the application covered this!

 

Yes - we CAN override and i had considered this, but guessing that if the IRD dont know that it is a payment type that is exempt from ACC, their records for that employee will always show a shortfall.

 

By the way, its not a "unique situation" ... this is from the IRD website

"Most lump sum payments are subject to the ACC earner’s levy. Redundancy payments, retiring allowances and employee share scheme (ESS) benefits are not, regardless of the income source. The ACC levy for 2019-20 tax year is only paid on the first $128,470 earned."

 

so its entirely "normal" that a payroll should be expected to handle this situation.

 

We will muddle through, and thanks for getting back to me.  Perhaps put this forward as a development idea?

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