Employer Share Scheme Reporting

From 1 April 2017, employers will have compulsory reporting requirements in New Zealand in respect of employee share scheme (ESS) taxable income.

From 1 April 2017, employers will have compulsory reporting requirements in New Zealand in respect of employee share scheme (ESS) taxable income. In addition, employers will need to decide whether to elect to voluntarily withhold PAYE on ESS taxable income. Regardless of whether an election to withhold is made, employers will need to comply with the new mandatory reporting requirements.

Previously the responsibility for reporting such income rested with the employee. This responsibility now shifts to the employer, so employer reporting of ESS benefits is a significant change for New Zealand employers.

The reporting will be administered via the existing PAYE (salary withholding tax) reporting system. This will present a practical challenge for many employers as payroll teams may not always have access to sensitive remuneration data around ESS benefits. IR activity on ESS benefits is increasing and will continue to do so as IR wish to ensure employees (in the absence of withholding) are paying tax on the ESS benefits and any subsequent investment income.

PAYE Withholding is elective. Your decision to withhold may depend on whether your specific ESS plan rules allow for withholding, but also whether you can administer withholding and pay the PAYE within the required PAYE due date.

How PwC can help

Our team can help you understand the new reporting obligations, and share our experience with the practical issues with administering voluntary withholding. If confidentiality of ESS benefits within your organisation is important to you, or your current payroll reporting may not be able to integrate ESS income reporting, we can help find a solution for you.

Our services include:
  • helping you understand your reporting obligations
  • helping you decide on whether PAYE withholding is suitable for your organisation
  • updating your plan rules and processes if you wish to adopt PAYE withholding
  • assistance with establishing and operating a separate PAYE registration to deal specifically with ESS income reporting
  • providing and updating communications to employees, including presentations to your staff on what their employer is doing but also around their own obligations.
Your benefits
  • comfort that you as an employer have met your obligations
  • comfort that your employees know their own obligations
  • a reduction in internal payroll administration time and costs
  • the ability to retain confidentiality of ESS data.
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Geof Nightingale

Partner, Auckland, PwC New Zealand

+64 21 940 346

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David Lamb

Partner, Auckland, PwC New Zealand

+64 21 941 466

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