Employee Share Scheme Benefits

Employee Share Scheme Benefits

Employee Share Scheme Benefits

For employers wanting to provide benefits to employees in the form of an Employee Share Scheme (ESS).   
Deducting tax is optional because it won't suit all schemes. If you do deduct PAYE, then student loan and child support amounts must also be deducted (if applicable). Employee share scheme benefits are not liable for the ACC earners' levy or KiwiSaver deductions.  Benefits are taxed as "extra pay or lump sum". These payments are to be shown as a separate line item on the Employer Monthly Schedule report (EMS) sent to IR.
In iPayroll set up your 2 Pay Elements (Payment and Deduction) depending on if you have chosen taxable or non taxable, then add them both to your employee's timesheet entry in an open pay. 
For more information here IR Employee share scheme (ESS) rules
For more information here IR Employee share scheme (ESS)
For more information here IR335 Employer's Guide
For more information here IR Taxing Extra Pays or Lump Sum

Taxable Pay Elements - Payment  

  1. Setup > Pay Elements > Payments
  2. + Add
  3. Payment Code* > ESS-TAX
  4. Description* > Employee Share Scheme - Taxed as Extra Pay
  5. Edit Payslip Description if required by you
  6. Multiplier is 1
  7. Calculation Rule* > "Rate Amount" from Payment Details
  8. Rate Amount* 0.0000
  9. Priority is 249
  10. Liable Earnings > DO NOT Tick all three Accumulates into... fields
  11. KiwiSaver Earnings > Select > Earnings Not Liable for KiwiSaver
  12. Earnings Type* > Employee Share Scheme (Extra Pay - No ACC Earner Levy)
  13. SAVE

Taxable Pay Elements - Deduction 

  1. Setup > Pay Elements > Deductions
  2. + Add
  3. Payment Code* > ESS-TAX-DED
  4. Description* > Employee Share Scheme - Taxed Deduction
  5. Edit Payslip Description if required by you
  6. Calculation Rule* > Percentage of Accumulated Value
  7. Calculation Accumulator > Employee Share Scheme - Taxed
  8. Rate %* 100.00
  9. Priority is 899
  10. Payment Details > Cheque Schedule
  11. Deduction Type > Other > Standard Deduction
  12. Allow Partial Deduction 
  13. SAVE

Non Taxable Pay Element - Payment

  1. Setup > Pay Elements > Payments
  2. + Add
  3. Payment Code* > ESS-NOTAX
  4. Description* > Employee Share Scheme - Not Taxed
  5. Edit Payslip Description if required by you
  6. Multiplier is 1
  7. Calculation Rule* > "Rate Amount" from Payment Details
  8. Rate Amount* 0.0000
  9. Priority is 249
  10. Liable Earnings > DO NOT Tick all three Accumulates into... fields
  11. KiwiSaver Earnings > Select > Earnings Not Liable for KiwiSaver
  12. Earnings Type* > Employee Share Scheme (No Tax Deducted)
  13. SAVE

Non Taxable Pay Elements - Deduction

  1. Setup > Pay Elements > Deductions
  2. + Add
  3. Payment Code* > ESS-NOTAX-DED
  4. Description* > Employee Share Scheme - No Tax Deduction
  5. Edit Payslip Description if required by you
  6. Calculation Rule* > Percentage of Accumulated Value
  7. Calculation Accumulator > Employee Share Scheme - No Tax Deducted
  8. Rate %* 100.00
  9. Priority is 899
  10. Payment Details > Cheque Schedule
  11. Deduction Type > Other > Standard Deduction
  12. Allow Partial Deduction 
  13. SAVE

Open Pay > Employee's Timesheet Entry 

  1. In the Timesheet Entry screen
  2. Qty > 1
  3. Select > ESS-TAX or ESS-NOTAX (as per your requirements)
  4. Rate > Enter the amount of the benefit
  5. Add
  6. Qty > 1
  7. Select > ESS-TAX-DED- or ESS-NOTAX-DEDN (as per your requirements)
  8. Rate - not required, as this is automatically determined by the payment 
  9. Add
  10. Messages and Notes > Private Payslip Message (if NO TAX )
  11. “Employee Share Scheme not taxed, the obligation to pay tax on the Employee Share Scheme remains with the employee”.
  12. Save
  13. Review Payslip