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Introducing New Zealand Payroll in Xero

Posted 2 years ago in Advisors by Oliver Furniss
Posted by Oliver Furniss

Last week we announced the imminent arrival of New Zealand Payroll in Xero. Today we’re pleased to announce it’s been released so you can get ready for processing payroll from the 1st April. Now is the time to make the change in time for the new financial year.

Getting Started with New Zealand Payroll in Xero from Xero.

We’ve built beautiful, online New Zealand payroll for small businesses that’s easy to implement and easy to use from anywhere. Information from payroll flows seamlessly to the general ledger with journals automatically created.

New Zealand Payroll

We know that changing payroll systems is not easy. Having your two primary business systems combined into one experience saves time and money and improves accuracy.

From today you can get ready for 1st April by setting up payroll to suit the needs of your business including adding employees. We’ll be enabling the ability to process payroll from 1st April.

New Zealand Payroll includes:

Employer Settings

  • Support for small & large employers for Inland Revenue reporting & filing obligations
  • Tracking by Employee Groups for cost analysis
  • Weekly, fortnightly, half-monthly, four-weekly, and monthly Pay Calendars
  • Standard Public Holidays provided, grouped by region
  • Add custom holidays as required by each business

Manage Employees

  • Recording personal details including employee photo
  • Managing employment details including salary/hourly rate, standard days per week & hours per day
  • Enter IRD Number, Tax Code, ESCT Rate, (Tax Rate, Special Student Loan Rate)
  • Manage KiwiSaver including eligible employees, Employee & Employer Contribution Rates, Opting Out and Contributions Holidays
  • Employee’s joining KiwiSaver or Opting Out advised via monthly filing to Inland Revenue
  • Salary Sacrifice for KiwiSaver
  • Leave balances for Annual leave, Holiday Pay, Sick Leave, Alternative Holidays and custom leave types
  • Enter employee notes to record comments against each employee
  • Enter employees past 12 months gross earnings easily
  • New employees advised to Inland Revenue via monthly filing
  • Create a pay template for each of your employees to make your pay runs quick and easy

Employee App

  • Available online at launch and coming soon to iOS and Android
  • Employees can access pay history, download payslips and view personal details
  • Request leave and manage current leave requests
  • Optional ‘Manager’ role can be given to employees to approve leave requests without accessing the business or payroll financials

Pay Elements

  • Record current future hourly and annual salary pay rates
  • Unlimited custom earning rate types, based on the either: base pay rate, rate per unit, or fixed amount
  • Unlimited custom leave types in addition to the statutory leave types
  • Manage statutory leave types including Holiday Pay (8%) and unpaid parental leave types
  • Unlimited custom deduction rate types including Payroll Giving deductions
  • Unlimited custom reimbursement rate types
  • Student Loan Repayments, including Additional & Voluntary Student loan repayments
  • Support for Statutory Deductions for Child Support, Court Fines, MSD Repayments and Inland Revenue Arrears
  • KiwiSaver deductions and contributions
  • Unlimited custom superannuation rate types in addition to KiwiSaver (for complying and Other funds)

Tax & KiwiSaver

  • Convert to Payroll in Xero at the start of any month
  • Built-in Tax, ACC, Student Loan, Payroll Giving & ESCT rates
  • Tax rate updates automatically handled
  • Filing to Inland Revenue includes: KiwiSaver, Additional & Voluntary Student Loans and Child Support information
  • Filing to Inland Revenue by uploading a file to ir-File

Payments

  • Electronic payment of employee net wages via file to upload to bank
  • (Cheque and cash payments not directly supported)

GL Integration

  • Automatic posting of payroll information to general ledger
  • Reconcile your net wages by allocating the spent transaction to your wages payable account
  • ‘Wages Payable’ (Account number 814) and ‘Wages Deductions’ (Account number 816) have been created automatically.
  • For existing customers we checked for the existence of the account number or name and if it already existed in the chart of accounts , we didn’t add the corresponding chart of account, if it does not exist we added to the chart of accounts.

Payslips

  • Access payslips for any previous pay run
  • Email payslips directly to employees
  • Invite employees to self-service payslips from the employee app

Superannuation

  • Employee and employer contributions entered as an amount or as a percentage
  • Employee contribution only via Fixed amount apart from KiwiSaver

This is just the beginning. You’ll see constant enhancements, improvements and features being made available as we get your feedback and strive to make New Zealand Payroll in Xero smarter and more powerful.

If New Zealand Payroll in Xero doesn’t meet the needs of your business we recommend using one of our payroll partners from the Add-on Marketplace.

Read more about getting New Zealand payroll set up in our help centre.

Now is the time to change

We’re removing our existing Premium plan from 31st March and introducing new Premium plans based on the number of employees you pay each month. If you’re on the Standard plan you’ll get one employee included. The number of employees is the number of active employees you pay per month.

New Zealand Payroll Pricing 1 New Zealand Payroll Pricing 2

If you’re currently on the Premium plan you will continue to pay $65 a month if you don’t use the new payroll feature. If you start to use New Zealand Payroll you’ll automatically be moved to the new Premium plan based on the number of employees you pay.

These monthly prices are one price for both accounting and payroll. All of the Xero features you currently love and now New Zealand Payroll as well. One price for one seamless accounting and payroll experience.

To help you get set up and ready we’re holding online webinars to allow you to get trained. We’ve also produced a Setting Up Payroll series for New Zealand payroll in Xero U.

Now’s the time to make the change to New Zealand Payroll in Xero and get ready for the new financial year on the right foot.

 

60 comments

Rob Stewart
March 4, 2015 at 2.09 pm

Good work team. Just to confirm, do all of the premium plans come with multi-currency?

Oliver Furniss in reply to Rob Stewart
March 4, 2015 at 2.11 pm

@Rob yes all Premium plans come with multi-currency.

Jared
March 4, 2015 at 2.38 pm

Nice stuff! Question: If I have one employee to pay, but need multi-currency for international client invoices, would I have to now pay 85/m?

Oliver Furniss
March 4, 2015 at 2.39 pm

@Jared, one employee with multi-currency would need Premium 10 at $75 a month. All Premium plans have multi-currency included.

Thomas Botha
March 4, 2015 at 2.57 pm

Does the ‘Premium 100’ plan allow for a payroll in excess of 100 employees, or is that the maximum?

Oliver Furniss in reply to Thomas Botha
March 4, 2015 at 2.59 pm

@Thomas, 100 employees is the maximum number of unique employees that can be paid each month using Payroll in Xero.

Tony
March 4, 2015 at 3.13 pm

How can I make a change to opening balance date? It appears to locked after I put the initial date in.

Oliver Furniss in reply to Tony
March 4, 2015 at 3.20 pm

@Tony, the Opening Balances date is locked once you create a Pay Calendar. To change the Opening Balances date you need to delete the create calendar. It is important you are clear about when you want to start processing pays in Xero. We suggest selecting April 1 then at the end of March you will need to update your Opening Balances for Gross Earnings history and leave balances.

Matt Kent
March 4, 2015 at 4.24 pm

We have 5 regular staff, but employ 2 university students for 3 months at a time. Once the interns have left, does terminated employees count towards your 10 staff limit? Or is it only 10 Active staff?

Oliver Furniss in reply to Matt Kent
March 4, 2015 at 4.51 pm

@Matt, the employee number does not include terminated employees. It is the number of unique active employees you pay per month.

Joel Ram
March 4, 2015 at 4.32 pm

Is Payroll available with XERO GST Cashbook

Oliver Furniss in reply to Joel Ram
March 4, 2015 at 4.49 pm

@Joel, Payroll in Xero is only available for Standard and Premium plans. At the moment it is not available on partner edition plans.

Debra
March 4, 2015 at 5.24 pm

Employees at this company load their time into time sheets on Workflowmax. Is there any way under the new Payroll system for Xero that you can download their timesheets directly into the new system? I’m the Payroll Manager and assume I will still need to manually input their relevant time into Xero payroll? Thanks.

Suzi
March 4, 2015 at 7.43 pm

I’ve been moaning for months about wanting Xero to put out an easier form of payroll other than MYOB or ACE Payroll. Finally, I can do wages when I’m away from the office!! Nice Job !!!

Colin MacKay
March 5, 2015 at 7.27 am

We are employers of casual agricultural workers, mainly working holiday visa holders, At our busiest time we might have 10-15 employees. Some only work for a few days, others for a few weeks, and so would our “usage” charges be based on the total number of employees that show up on the IRD return that we make each month?

Oliver Furniss
March 5, 2015 at 8.21 am

@Debra, right now we don’t have timesheets for New Zealand payroll (but they will be coming) to be able to integrate timesheets. For now if you wanted to use Workflowmax with Payroll in Xero you would have to manually transfer the hours work into the pay run each time. Once the API and timesheet feature is available we will be connecting the two so that the hours work flows seamlessly from Workflowmax into Xero.

Oliver Furniss
March 5, 2015 at 8.23 am

@Suzi, thanks for the feedback!

@Colin, the plan you need is based on the number of unique employees you pay in a given month. So if one month you have 9 employees you would be on Premium 10. If the next month you had 17 employees you would be prompted to upgrade to Premium 20. You would then stay on that plan until you changed back to Premium 10 if the employee number drops below 10.

Fiona Palmer
March 5, 2015 at 10.28 am

It seems in the set up that annual leave is set up by total number of “hours” accrued annually. Generally, full time employees have to be paid in “weeks”. ie. 4 weeks per year. You aren’t supposed to use hours. Also, if I have a standard subscription and elect not to use payroll what will I be charged?

Brent Swann
March 5, 2015 at 11.21 am

I use other software for my payroll, which I am more than happy with. I am a bit confused, do we not have a choice, and instead have to use Xero Payroll and in my case an increased fee, instead of just doing the normal “Pay Run” as we always have?

Oliver Furniss in reply to Brent Swann
March 5, 2015 at 12.16 pm

@Brent, if you don’t use payroll you won’t pay for it and your current monthly subscription will remain the same. You aren’t forced to use any features in Xero.

Keri
March 5, 2015 at 12.13 pm

We are likely not to use payrole, can we remove the TAB from our xero settings

Oliver Furniss in reply to Keri
March 5, 2015 at 12.15 pm

@Keri, it’s not possible to remove/hide the payroll menu.

Harriet Jull
March 5, 2015 at 1.50 pm

this is timely as i was looking to purchase another software package. We have previously use the payrun in Xero to generate payslips for employees, so do I need to enter the last years history or will it populate from the existing Pay runs in Xero.

Mary Moore
March 5, 2015 at 3.03 pm

I’ve just watched the setup webinar, which was a good intro. Bit concerned that the processing webinar isn’t happening until April….is there a definite date for that yet? It would also be great be able to do a “dry run” (parallel) payroll before 1 April….because many clients will want to test before they commit and 1 April is the ideal time to swap. I understand from Emma who was running the webinar that we can’t do this because payroll is still under development…is there any chance of having something out before 1 April?

Matt Gardner
March 5, 2015 at 5.33 pm

We develop complaint desktop payroll solutions for NZ and other countries, and we’re also Xero customers, and have noted with interest the imminent release of your payroll solution.

Firstly, annual leave for permanent staff must be in weeks (there are rare exceptions) – it is not correct to accrue percentage hours or 4/52 (7.692308%) or 8% for that matter as a varying work pattern or changes to weekly pay values will result in varying values for leave at the time it is consumed. Further, regardless of the non-compliant method selected you must be able to show that it meets the requirements of the Act.

Secondly, the pay period dates omit the period ending date (though the take-on page indicates period ending – somewhat confusing). IRD tax rates are implemented on the basis of the period end date, not the period start and not the pay date (check the IR340).

Question: Does Xero Payroll attempt to correctly value annual leave accrued whilst on parental leave or in the parental leave shadow? If it doesn’t then it is likely to be paid incorrectly when consumed or during termination payment calculations.

Oliver Furniss in reply to Matt Gardner
March 6, 2015 at 3.21 pm

@Matt, your statement around Annual Leave is correct however we don’t only accrue annual leave at 8%. We don’t yet automatically assign the Annual Leave leave type to all permanent employees and therefore you may not have seen where you can specify the 4 weeks annual entitlement (which we currently require users to calculate and manually enter as the equivalent hours). We are compliant provided customers enter data correctly.
We know this is a difference for people so will be providing instructions to be included in the help, and why ‘Leave Adjustments’ is high priority for us to roll out shortly.

Your statement on the date to use to calculate taxes is correct. You’ve assumed that since we define a pay calendar based on the 1st day of a pay period that we calculate taxes based on the 1st day of the pay period which is not correct.

Payroll in Xero, will (not just attempt to) correctly value annual leave accrued whilst on parental leave or in the parental leave shadow. At the moment you’ll have to manually transfer any annual leave accrued whilst on parental leave (or the 12 months following parental leave) to Annual Leave – Parental.

Martin our Product lead will email you directly to answer your questions in my detail. Thanks

Tracey Winkel
March 5, 2015 at 7.09 pm

How are we able to test the Payroll functions before deciding if it does what we want? Also why are the dates month, day, year when we enter as day, month, year?

Reid Fletcher
March 6, 2015 at 10.49 am

When I changed from Cash Manager to Xero I subscribed to Crystal Payroll on my accountants advice due to the inadequacy of the Xero payroll features.
Having looked at the new release Xero Payroll I am tempted to change and wish to inquire if, apart from price, is there any marked difference in the respective applications.

Victoria Smith
March 6, 2015 at 11.50 am

Our company deals with Cruise ships and for 4 days a year (1 day a month from November to March) we hire about 100 plus staff just to work on those 4 days. The rest of the year we only have 5 permanent employees. What would happen regarding pricing over those months?

Oliver Furniss
March 6, 2015 at 11.53 am

@Victoria, the month you pay 100 employees you would need to upgrade to Premium 100. The other months you would be able to be on Premium 10. You will be prompted to upgrade when you go to pay more than 10 employees and then you can downgrade once you’ve paid them. Hope that helps.

Deanne Bridle
March 6, 2015 at 1.19 pm

We are a new company just starting up, so far staff are contractors until the business is viable, we want to start employing from 1st May 2015. Does it matter if the Opening Balances Date is 1st April 2015 for reporting to IRD even if there aren’t any staff payments yet?

Deanne Bridle
March 6, 2015 at 1.27 pm

I have started to the setup process, In the Pay Calendar I chose 15th of April to make the first monthly payment run, it says next pay run is 14th June, can I override this and pay on 15th June?

Karen Matthews
March 6, 2015 at 2.19 pm

We have a client who is a standard user who wishes to use the new payroll software for less than 10 employees.
Do they need to contact you, or will you automatically upgrade their subscription to the Premium 10 rate?

Oliver Furniss in reply to Karen Matthews
March 6, 2015 at 2.22 pm

@Karen, you can the business and employees set up now and ready to go. When you go to process the payroll for the first time you will be prompted to upgrade to Premium 10. Or you can upgrade to Premium now and you will be moved across to Premium 10 on April 1st. Let us know how you find using the system.

Kelvin Hartnall
March 6, 2015 at 11.00 pm

If a user doesn’t have ‘Payroll Admin’ rights, they still see ‘Payroll’ as a menu option but without any submenu options or anything to select. In my opinion this just appears broken and seems quite confusing. I suggest that if a user can’t access Payroll then they should either not see ‘Payroll’ in the main menu or clicking ‘Payroll’ should do something. Maybe it could bring up a little box that says that they haven’t been assigned payroll rights and that they should contact their administrator. Or some other solution that explains why they can’t access ‘Payroll’.

Amanda Inskeep
March 7, 2015 at 9.10 am

I do not need multi currency but will have 2-3 employees. It seems I now have to pay for a premium plan that comes with multi currency that I don’t need?

Roger Nicholls
March 7, 2015 at 10.02 pm

can we upload from our existing payroll system to Xero NZ payroll?

Edward
March 9, 2015 at 10.42 am

A question about how the actual payments will be made? Will Xero simply calculate the amount that needs to be paid, so that we will need to enter that information into our bank account (a similar process to raising invoices), or will the bank payments themselves be generated (so that there is no manual entry of the payment amount for each employee)?

Our current payroll provider has a relationship with a bank, who makes the payments on our behalf.

Dave Guerin
March 9, 2015 at 2.09 pm

The functionality for permanent employees with variable hours (not casual staff) is weak right now and would require too many workarounds for me now (for instance accrued leave must be provided as hours, which are meaningless for staff with variable hours), but I want to use a fully-integrated payroll service when those things are fixed. I’ll keep using Xero for my accounts but would be keen for you to keep us updated as you improve the system.

Lyn
March 10, 2015 at 12.58 am

jow can we move the payroll tab it is so annoying to have it situated where it is when we don’t use it

Oliver Furniss
March 10, 2015 at 4.01 pm

@Kelvin, agree with you. We’ll get that fixed. Thanks for the feedback.

@Amanda, to use Payroll with more than one employees you will need to use Premium 10.

@Edward, for now the payment needs to be handled by you by downloading the banks payment file and uploading into online banking or manually entering the details. We hope to offer seamless payments in the future.

@Lyn, I’m afraid it’s not possible to change the order of the tabs at this stage.

JUDY
March 10, 2015 at 5.32 pm

So if I have 2 employees – including myself I will need to pay as much as a company who employees 10 employees?

Nick Crossman
March 11, 2015 at 2.29 pm

I asked in the forums about the redundant Payroll tab and someone from Xero agreed with for a day and removed it, but then it’s back again. @Lyn and @Keri I ended up using Ad Blocker to remove the Payroll tab – I just said it was a Ad and it’s gone. It’s a hack, but I just can’t understand why I have to see Payroll when I’m not paying for it. It’s like seeing the Advisor tab when you’re not an Adviser

Steve
March 13, 2015 at 10.38 am

I understand that your focus will be on emailed payslips but I am wondering if we will be able to print a payslip and whether it will be formatted to work with self seal payslips.

Tracey Winkel
March 15, 2015 at 8.59 pm

Hi, I wrote a couple of questions on 05 March, they have yet to be answered so I shall re ask here please. – How are we able to test the Payroll functions before deciding if it does what we want? Also why are the dates month, day, year when we enter as day, month, year in NZ?
Further to this as I use two xero clients sites I get a small discount, will the discount still apply if only one of the clients upgrades to the new xero with payroll?

Lindsey
March 16, 2015 at 11.22 am

Do we have to use the new Payroll or can we use the pay Run under the accounts tab?
We have 2 employees incl me and now I will need to pay an extra $25 per month to do Payroll?!!
And does the new Payroll incl the ability to pay contractors who don’t pay PAYE but we pay their Withholding tax on their behalf?

Steve Nathan
March 16, 2015 at 1.05 pm

Firstly I would concur with @Tracey re the ability to do one or more trial runs before the 1st of April. Going live on an untried system does not make sense.
Second I have a few questions (if there is somewhere else I should be directing these please let me know)
1) I have several employees who work in more than one cost centre. How do I code these payments.
2) Some of these employees receive a different rate depending on what they are doing. It appears I can only have one hourly rate per employee?
3) When I tried to set up two rates it overrode the base rate but this did not update the pay template which still shows the original rate.
4) In the pay items set up you have an “Overtime 1.5” which states – “Show as default pay item for all employees” yet I cant see that it comes through to the employees Pay Template? Also is the rate factor of 1.5 calculated by the system or do I have to key a value equivalent to 1.5 their hourly rate.
5) In the Pay Template what is the difference between Salary & Wages and Earnings?
6) I have set up a new Allowance but I cant see it anywhere in the employees Pay Template?
If it is easier for me to email my questions or even have a chat with someone I am happy to do so.

Martin Etherington
March 17, 2015 at 3.39 pm

@Nick @Lyn and @Keri. The Payroll menu issue has been fixed and no longer shows if the logged in user doesn’t have Payroll Administration permissions.

Martin Etherington
March 17, 2015 at 3.41 pm

@Steve You we will be able to print payslips and they are formatted to work with self seal window envelopes.

Martin Etherington
March 17, 2015 at 4.11 pm

@ Tracey From 31 March you will be able to test the full functionality of the payroll. This will be able to be done in the Demo Company or your live org. In your live org, I recommend setting the Opening Balances Date to 1 March 2015. Set up your employees, with their leave balances as at 1 March and enter the 12 months Gross earnings history for those employes that need it up to 1 March. Then (re)process your March pays in Xero to confirm that everything works as expected. You will then be ready to go live from 1 April.

For the NZ Payroll in Xero, all dates should be in Day, Month, Year format. If you come across any that are not please contact support with details of where it is shown in the wrong format, and we will fix them.

Any discounts will continue to be applied.

Martin Etherington
March 17, 2015 at 5.01 pm

@Steve Nathan
See the comment above, re testing prior to going live.
Yes, please direct these specific queries to support.
As questions are answered we are updating the help, with frequently asked questions.

Martin Etherington
March 17, 2015 at 5.12 pm

@Lindsey If you have been using the Pay Run feature, you can continue to do so. But we would recommend moving across to using Payroll. There are many benefits including: time savings (e.g. no manual looking up tax tables), automatic leave rate calculations, leave balances maintained, easy filing at the end of the month, …
Payroll does include the ability to pay contractors who are subject to Withholding Tax rather than PAYE.

Simon
March 19, 2015 at 11.00 am

I am a small business that has 1 employee myself but I income split for tax purposes. It appears that I would need to upgrade to the next level plan as this makes it 2 employees. This seems a little unfair is there a way to keep plan the same but cover 2 employees

Julia
March 19, 2015 at 4.59 pm

Hi there – I am going through the motions to bring 2 companies Payroll over ………. Do I really need to Generate ALL of their pay history to bring the leave information over to Xero…….. some employees will have more than 20 lines, all with different pay information for me to edit (each pay is a different amount/hours)……… Am I missing something here???

Roger Nicholls
March 23, 2015 at 9.37 pm

IN NZ-Payroll. With entering only the days worked per week, rather than actual days in the week how does Xero establish which Statuatory pays should be paid against the question its i a normal work day,
We employ upwards of 40 Staff most during school terms only.

Miriam
March 25, 2015 at 4.24 pm

When adding salary/wage details for an employee and it asks for the hours per pay and days per week. Is this set in stone? We pay our staff an hourly rate and the number of hours per day will vary. Do I enter an average or approximate hours per day in here?
When it say the effective date (I presume of their current pay rate) I see it goes to their start date. Does it matter that they were on a different pay rate on their start date?
In the opening balances, is it just the 12 months gross earnings before the conversion date that are required?
We are converting from Ace Payroll and all our staff holiday pay is calculated at 8% of their gross earnings. Are we able to just bring in that dollar value of holiday pay for each staff at conversion date? I know not precisely compliant but Ace Payroll has the option to calculate this way which we did.
We pay our staff weekly and the payrun goes from Thursday to Wednesday. Should I do the first payrun in Xero for the week ending Wednesday 1.4.15, or should I do that pay run in our old system and kick off in Xero for pay period ending 8.4.15?
Each staff has a tool account with us which is a loan for them (and an asset account for us). Each pay they make a payment to their tool account which is a deduction from their pay. The payment goes straight off their loan (our asset) however I see it won’t let me code a deduction to an asset account. How can I get around this?
Thanks

Malcolm Cox / realestate.co.nz
April 5, 2015 at 2.19 pm

Can I pay contractors in Xero? This will involve adding GST to payments. Please advise . . .

Sylvie Eymin
April 17, 2015 at 8.48 pm

It looks like the Xero Payroll is ore advance in Oz, why this difference?

Xero could be exactly so good like Flexitime or Smart Payroll, why this take that long?

Why Xero does not take the one person payroll scheme from Flexitime for free?

Andy Davis
March 22, 2016 at 12.23 pm

Our salaries are Employer Kiwisaver Contribution inclusive however I don’t seem to be able to make this manual alteration in the payslips to provide accurate details to our employees. Nor can I find anywhere in the payroll system to make this ammendment. Is this something that can be done and if so how? Thanks Andy

Megan Firkin in reply to Andy Davis Xero
March 24, 2016 at 4.09 pm

@Andy, maybe drop a line to the support team? support@xero.com I am sure they will be able to talk you through what you need to do.

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