Kiwisaver teething problems

The Herald last week reported on teething problems with KiwiSaver, which has compulsory employer contributions kick in tomorrow.

These are somewhat more than teething problems, they have been causing huge problems for accountants and employers up and down the country. It is a classic example fo what happens when a Government makes last minute changes without proper consultation.

I know a bit about this, because an accountant told me about it a couple of months ago. Basically what the Government had done was make the employer tax credit of around $20 a week a daily tax credit. Instead of just making it say $20 a week or $1040/12 a month they said employers have to calculate it on actual days employees have worked.

The problem is PAYE is calculated monthly or twice a month. And in case you have not noticed, months vary in length.

What it means is that rather than having a standard amount every PAYE schedule, it will vary all the time. Now that may not sound much work, but trust me the complexity have been driving people mad.

The good thing is the Government is now going to change things, but then again you have a last minute change. This means that payroll software companies may only have days instead of months to properly test software updates.