Setting Up Payroll ­ Frequently Asked Questions

If you have any further questions that are not covered in this FAQ document, please email them through to: nz.payroll@xero.com

Calculations How do you suggest handling the 1st April being the middle of a pay week? Pay half in the old system, pay half in Xero payroll? You can backdate your first pay run in Xero to start in March. If an employee is paid monthly and their pay is increased partway during the month, will Xero calculate this accordingly? Yes ­ You can setup a salary or wage increase to be effective from a specific date and Xero will pick it up in the pay run. The allocation of hours between the two part months will need to be reviewed, especially if the employee doesn't work Monday to Friday Is it possible to do, for example, 3 weekly pays in advance to be paid on the correct dates as they occur. ie if the payroll person is going on leave could they pre­prepare and send through the pays for future dates? You can process pay runs in advance and download the batch payment files for your online banking. The payment files can be downloaded, and uploaded to the bank to be paid on the relevant date. (Most banks allow payment batches to be done up to 3 months in advance). Is the salary amount yearly or the actual amount to be paid in the pay run? The salary amount is yearly. How does the average earnings calculation know what period the opening balance covers? Each row (or pay) in the Opening Balances has the period end date of that pay. As new pays are posted in Xero, records are added to this table ­ these are not visible to the user in the Opening Balances tab, but will be reportable. How would Xero payroll handle an employee returning from paid parental leave and taking annual leave in the first 12 months of returning to work where you have to pro­rata the salary? If an employee becomes entitled to annual leave while on parental leave or in the 12 months following the end of the parental leave, that annual leave needs to be paid out at just Average Weekly Earnings (AWE) rather than the higher of Ordinary Weekly Pay (OWP) and AWE. For now, a user needs to manually transfer this leave from 'Annual Leave' to 'Annual Leave ­ Parental' to ensure the correct calculations are applied. Where would you put in GST for someone who is paid Withholding income with tax deducted, but is also GST registered? Set the GST up as a Reimbursement. At present this cannot be coded directly to GST, so code it to suspense. More information to come. How can you tax additional bonus payments, for example: when we want to tax the bonus at a higher rate?

Initially this will be a manual calculation. We will provide instructions. Automating this within the software is high on the list. I've got a client who will be paying staff commission only with no leave accumulated. How would I deal with that please? Set the base salary and wages to zero days per week and hours per day, with a zero hourly rate, then add Commision earnings in the Pay Template with a zero amount (assuming it varies from pay to pay). Holiday Pay must be accrued at 8%. This could be paid each pay if required. When employees leave, does Xero calculate the termination pay amount? Not for the first release, but coming soon. Manual instructions will be provided. How do you put in what days a week an employee works? Xero isn't able to record what days in a week an employee works, just the number of days worked in a week. How do you cover extra emolument PAYE events i.e. a bonus is paid and the extra emolument rate needs to be applied? A manual tax adjustment can be added to the payslip. The amount does need to be manually calculated for now, until we provide a Tax Override option to do the calculation automatically. Instructions will be provided in the meantime. What if you have various hours worked per day but employee is on salary? Set up the salary and wages with the minimum or default hours and days per week. Then override the hours each pay. The defaults will be used when calculating leave rates, so these should be a base or minimum amount to ensure average earnings are higher. What is the difference between wages and salary and earnings? Wages and Salary are generally the default way in which most employees are paid. Earnings could include money earned outside of your normal pay such as a bonus. If an employee only works one set day a week is there a facility in Xero Payroll to recognise if this days falls on a Public Holiday? No. If there is a public holiday that falls within the pay period, it will show in the pay slip. The hours will default to the employees base hours per day. The user will need to override this to the actual hours if it would have been a normal work day, or override to zero, if it wasn't a normal work day for that employee. We are open 8 hours a day but only 6 hours on a Friday. How can I dictate the hours per day separately in the update salary and wages section? This can be edited whilst a pay run is being processed within each employee’s pay template. A better option (from the point of view of annual leave calculations) is to set the hours per day to 7.6 to give a total of 38 hours per week. Any leave requests, will need to be edited to either 8 or 6 depending on the day the leave request is for. Deductions Are you able to have accumulating deductions? For example, an employee paying back a fixed amount each week that will automatically stop once the balance has been reached. No, this will need to be a manual calculation. Does it handle reducing balances for Ministry of Justice and WINZ deductions? Yes.

If you have a court fine for example, you would put it to deductions. Is there somewhere you can put the Ministry of Justice bank account number? Not yet ­ this feature is high on the list. These will need to be paid manually as for any other creditor. Employee Payments Does Xero allow you to batch pay the payroll? You will still need to organise the payment through internet banking although you can download the batch file after processing the pay run, to upload into internet banking. We pay from a number of different bank accounts. Can we do this in Xero Payroll? No ­ all payroll amounts must be paid from one nominated bank account. We run payroll on the 15th of each month, apart from when it falls on the weekend. Will Xero know this? The pay run payment date will need to be entered each month when processing the pay run. The start and end dates will be updated automatically based on the previous pay run. When employees get paid ­ is that the end of the pay week or the actual date employees get paid? You get to select the date, their pay date can be the same date as the end of the pay week if you wish, but this is not compulsory. Net pay, can this be paid to two different accounts ie: regular salary to personal bank account and reimbursements to a credit card account? Yes. An employee's net pay can be paid into a maximum of 4 bank accounts. Payments can be made to credit card accounts also. If there is more than one account, one account will take the balance of the net pay, after defined fixed amounts are paid into the other accounts. At this stage these amounts, cannot be overridden when processing a pay, so the reimbursement amount would need to be set as the fixed amount back in the employee's bank account setup, and then the pay recalculated. We use Westpac Deskbank ­ would we be able to export the pay run data and import it in to make the individual payments to employees? Yes. Each bank has its own file format. We may not have all the banks supported at the beginning of April, but will have most, if not all, by the end of April. Assuming we don't have the Westpac format on 1 April, there will be a file that can be opened in Excel or Notepad to see the list of payments that can then be manually entered into Deskbank. Employee Portal Do employees see the notes that are written about them in the Employee Portal? No ­ the notes tab will only be visible to users with Payroll Admin access. What can employees view if invited to My Payroll? Currently employees invited to My Payroll will be able to request leave and view their payslips and see their personal information. Do I have to do anything to activate Payroll in My Xero account? I can see the tab, but cannot see any options. Payroll can be accessed by users with Payroll Admin rights. When users have these rights, they'll be able to set up Payroll Settings and Employees. Only from 31 March onwards will Pay Run functionality be enabled.

General Can you have multiple payrolls open at once? You can have 1 draft pay run open for each pay calendar. How do you enter more than one pay rate i.e. weekend rate is different from the weekly rate? You can create another Earnings Pay Item, with a Category of Other Gross Earnings. Use Rate per Unit as the Rate Type. This can be done by going to Settings > General Settings > Payroll Settings > Pay Items tab > Add earnings type. What is the purpose of multiple calendar dates when setting up payroll? Multiple calendars can be used when you pay your staff at different pay frequencies e.g some staff are on monthly salary while others are paid weekly wages. I have a quarterly pay calendar, can this be adopted? Not yet. If there is demand we'll add it. How many employees can Xero Payroll accommodate? 100 employees is the maximum number of unique employees that can be paid each month using Payroll in Xero. Is it possible to have a one­off pay run? Yes, there is an Unscheduled Pay Run feature. Will the NZ payroll file feed into Practice Manager and Tax? No. Will Xero have a qualification registry for staff? Not specifically. Xero Payroll is not an HR system, but there is the ability to add Notes for each employee. Why is date of birth a "required field". This is not required on most other payroll systems. For NZ, it is illegal to ask for a potential employee's date of birth. But once a contract is signed it is ok to ask for it. This has been confirmed by the Department of Labour. True, an employee doesn't technically have to provide it, but an employer is allowed to ask for it, and for the purposes of KiwiSaver, they need to ask for it, otherwise they have to make some assumptions. e.g. if the employee is under 18, or over 64 the employer is not obliged to pay Employer Contributions to KiwiSaver, and any new employee between 18 and 64 (who is entitled to reside permanently in New Zealand) must be enrolled in KiwiSaver (although they can opt out). If an employer doesn't pay employer contributions when they should, there are potential penalties. Also once an employee turns 65 they no longer need to contribute to KiwiSaver (provided they have been KiwiSaver for at least 5 years), and the employer can stop contributing even if the employee has to continue. Since employers should/must ask for the DOB, we made the decision to leave the DOB as compulsory, as it is for the other jurisdictions, so that our users are encouraged to ask (or get in the habit of asking) for it. It is only a minority of employees that object to providing it, and there is a workaround: assume the new employee is between 18 and 64 by putting in a birthdate of 01/01/1990 for example. If contributions are made when they shouldn't be, Inland Revenue advises the employer and refunds any contributions made in error. Processing KiwiSaver refunds can be messy to record in the payroll system and ideally should be avoided. Can scanned supporting documents eg: employment contracts be added to employee notes entered (not in files area where it would be visible)? No. The Notes section will only be able to hold text or memo information.

Can you edit an employee's details whilst a pay run is open or being processed? Some details are restricted from being changed while employees are included in a pay run, this includes an employee's Calendar Can you reinstate terminated employees if they return? You can, but this is not recommended unless they are casual employees. For permanent employees or employees changing from casual to permanent, or permanent to casual, it is best to set them up again as a new employee. This ensures leave can be properly audited and calculated. GL Accounts and Tracking Can each employee or groups of employees be expensed to different GL wages expense accounts? Yes ­ but we'd recommend the tracking feature be used to allocate this information. Can you track one salary payment against multiple tracking categories? This will be possible once the Timesheets function has been released. Is there going to be the ability in the future to have another tracking category? Some businesses are already using both options available. There are currently no plans to increase the number of tracking categories available. If we don't have a separate account for Kiwisaver, can we change the expense account while setting up and leave it all to "salaries"? Yes you can choose the expense code for Kiwisaver from the Superannuation pay item tab within Payroll Settings. When we post pay runs, will the total net pay be recorded against the account code, rather than showing individual coded amounts for each staff member? The net pays will be displayed as one total. Tracking is only letting us select the 'Tracking Category'. Why would it not be letting us select the Category Options under these? In Settings, you choose which tracking category to use for analysing employee's wages, and then for each employee you choose which option from that category applies to the employee. Are all the chart of accounts codes balance sheet codes? And are they only used for processing? Earnings codes are coded to Expense accounts; Reimbursements to either expense or liability accounts; Deductions & Statutory Deductions to liability accounts; Superannuation to expense and liability; The default accounts for the organisation are Bank Accounts (Assets), Liability accounts and an

expense account; Leave accounts are used for leave accruals (when we do them) and need an expenses account

and a liability account. Can it record tool loans and balances? Xero Payroll doesn't have the ability to record loans or balances. These amounts will need to be manually entered and restricted when the loan is paid in full. Can payroll expense allocation use financial tracking categories? Yes. A single tracking category can be applied to Payroll. Each employee can be allocated a single

default tracking option within that tracking category. Once we have timesheets, then an employee's time will be able to be allocated to multiple tracking options. Can Payroll use two categories ie Retail and Manufacturing and they have different Kiwisaver and deductions codes? Only one tracking option can be applied to as an Employee Group. This will track all pay items by this tracking option. However, different accounts can be used for each pay item, which is set up under Payroll Settings. Can you split a 40 hour week into 3 different tracking codes "eg: jobs" Payroll in Xero doesn't yet have the ability to divide hours across different areas. While we're working on a timesheet feature, which will allow this, this is better suited to dividing hours across locations than jobs, because our Tracking feature isn't designed to handle jobs that have balances or end after a certain period (users are free to set up the tracking category to be anything they like, including jobs, but there can only be one tracking category used in payroll. The category can have many options). Does it split out wages and kiwisaver on the P&L (if you want to track them separately) Yes. What is the advantage of using payroll tracking? Tracking in Payroll allows you to further divide the accounts associated with each pay item. Setting up Employee Groups allows you to filter reports by this group, so you could see more specific information at a glance. For example, total wages paid in the month of April for all employees who work in the Sales department. What are the different liability codes ­ how do we know which one to use? In Payroll Settings the PAYE and Wages liability accounts record the total amount owing for each pay item. These accounts will reduce in value as payments are made relating to PAYE and Wages and reconciled. If the default Xero chart of account is used, we'll set these up automatically. If a custom chart of accounts is used, we'd recommend you speak with your advisor regarding which accounts you should be using. The Wages Payable account is for employee's net wages. The PAYE liability account is for the PAYE, PDTC & ESCT taxes included in a pay run. History and Audit Trail Can I use Xero Payroll to set up payroll backlog? It's not recommended ­ Payroll should be used from 1 April onwards. You can go back to the beginning of the previous month. We’d recommend setting the opening balance date to 1 March, and processing March in Xero (as well as the old system) to make sure Xero is set up correctly. When you change an employee's wage or annual salary and change the effective date, will it keep a record of previous rates/salary amounts? Yes. The Salary & Wages will be locked and will create an audit trail of the earnings used and their pay details. Can we not bring over the sick leave and annual leave from our previous system in one balance rather than monthly? When leave types are set up in an employee's Leave tab, this is where current leave accrual balances can be entered. Does the audit trail show when the salary increased? Yes.

If we put the default start date of 1/4/15 for the employees, won't this affect their anniversary holiday & sick roll over date? Yes. The start date should be the employee's original start date. Should I input all past employee (terminated) information for historic purposes? You can, however, it is not required. There is no need to put in any employee's who finished prior to the opening balances date. Importing and Setup Can we import data from GORoster? i­e timesheets No. There is currently no import function. Can you migrate payroll data across from ACE Payroll into Xero Payroll? Currently there is no conversion tool so payroll information will need to be entered manually. Can you upload a csv file of employee details or do you manually have to do this? Currently employee details will have to be entered manually. Do we need to set up all employees from scratch or will they come across from contacts? At this stage, employee details will have to be manually entered into Xero Payroll. Leave Does Xero handle common anniversaries ie all staff get their annual leave calculated on the same date, regardless of their start date? No, currently this is not an option. But you can still pay out annual leave (in advance if necessary) for all employees at an annual closedown. My current payroll system allows our employees to bank extra hours worked and accumulate them. How do I process this in Xero payroll? See Help/Xero Community for AU payroll. This follows the same pattern for NZ. Create a Leave Pay Item called "Time Off in Lieu" (for example). Assign this to the employees that need it with an accrual type of "No Accruals" (this is effectively no automatic accrual = manual accrual). In a payslip, in the leave balances section, enter the amount to be added to the TOIL balance. To use any TOIL, a leave request will need to be created. New Leave Request type ­ is this where you could track absences? Yes. Does Xero payroll accommodate casual employees on pay as you go annual leave? Yes. Go to the Employee's leave tab, and click on Holiday Pay. There is an option there to pay Holiday Pay each pay. For setting up Annual Leave I have noticed that I can only elect annual hours, however, it is supposed to be set up in "Weeks" not "Hours". There doesn't appear to be an option for "Weeks". The annual hours entered should be the equivalent of 4 weeks, based on the employee's base days per week, times the employee's base hours per day, times 4. Holiday leave rate is often different to normal rate when they work different hours from the normal during the year. How do you allow for this in Xero. Xero will calculate the Employee's Ordinary Weekly Pay based on what is setup in the pay template, and will calculate the Average Weekly Earnings. It will then compare the two, and convert the higher

one back to an hourly rate, based on the standard hours per day and days per week for the employee. When requesting a days Annual Leave, the number of hours should be the same as the employee's standard hours. Can annual leave go into negative balances? Yes, NZ Payroll will allow negatives for all leave types. Can you add extra annual leave for a member of staff? I have a team member who has negotiated 10 weeks annual leave a year, but the 6 extra weeks should not be accruing 8%, it's a set amount. Create a new Leave Pay Item called (for example) Extra Leave, with a category of Paid. Assign this leave type to the Employee, and set the accrual schedule to On anniversary date (assuming the employee becomes entitled to it on anniversary. If a different accrual schedule is required, let us know). Can you overrule the payroll rules? eg. senior management in my business don't pay themselves holiday pay, and take far more leave than employment agreement ­ but manually I never put them into negative leave. Can this be done in Xero? Yes, but legally risky unless they are the owners of the business. What happens if they were to leave? When they do take leave is it recorded or just paid as salary? The Holiday Pay rate can be set to 0%. The annual Entitlement for Annual Leave can be set to zero. It could also be set to no accrual. Can you show just the Statutory holiday in our area so that it shows up when preparing payroll? You could potentially delete any Holiday groups and holidays you don't need, but why bother. Allocate the relevant holiday group to each employee, and only the holidays in that group will be used for those employees. We give our employees a paid day off for their birthday. Would I set this up in the add leave type of the leave section? It could be set up as a leave type, especially if it wasn't actually taken on the birthday and you wanted to keep track of the balance, otherwise I'd recommend setting it up as an Earnings Type called "Birthday Leave", based on a multiple of 1 times the employee's base rate. We have a staff member who has maxed out his holiday pay but wants a few days off unpaid. How do we enter this? Create a Leave Pay Item called (for example) "Unpaid Annual Leave". The category would be "Unpaid". Then assign this to the employee with the balance they can take, then do a leave request for the time requested and then this will show in the pay slip. If this unpaid leave is in excess of a week, then remember to record the number of complete weeks of unpaid leave at the bottom of the pay slip entry. This is to ensure leave calculations take these weeks into account. Is sick leave set up like annual leave? The same steps can be taken when setting up leave as a pay item, and then including this in an Employee's Leave tab. Generally annual leave will be set to accrual On Anniversary Date while sick leave will be Annually after 6 months. This will depend on each organisation's employment agreement.

Opening Balances Can opening balances be adjusted later after they have been saved? Yes.

In opening balances how do you add in Annual Leave, Sick Pay, Bereavement Leave etc? In the Leave tab when setting up a new employee, you have the option to assign leave types and then enter balances for each type of leave. Do I need to worry about opening balances if I currently use Xero Pay Run? Pay Runs in Xero and the new Xero Payroll feature are separate from each other. You will still have to enter opening balances for each employee. Can we run payroll for March 2015? From 1 April you will be able to process pay runs and backdate them into March if you require. I have managed my payroll (salary, PAYE and Kiwisaver) for the past year using Excel. I haven't bothered with holiday pay workings, etc because I was waiting for Xero to add payroll. Is there a way to back calculate holiday pay, etc for the past year or do I have to do myself and input opening balances for 1 April 2015? For permanent employees, you will need to enter details of the past 12 months pays into the Opening Balances tab for each employee. Then add up the gross earnings since the the employee's last anniversary date (or their start date if they have been employed less than a year), then multiply this by 8% to get their Holiday Pay accrued since their last anniversary. If they have been employed more than a year, you will need to work out how many years they have been employed to give a total number of weeks leave they have accrued since they started, and how much leave they have taken (in weeks) since they have started. The difference will be their current balance in weeks. Convert this to hours based on their standard days per week and hours per day. For casual employees, there is no need to enter the opening balances, but if Holiday Pay hasn't been paid each pay, you will need to add up their gross earnings on which Holiday Pay has not yet been paid and multiply this by 8%. A lot of this adding up could be done in Excel. If you start using payroll at the start of the year, do you need to enter opening balances for prior year? Opening balances are required for Leave types assigned to the employee (for permanent employees), and the past 12 months of Gross Earnings history also needs to be entered for permanent employees. Is the opening balance date the first date of the first pay run to be run in xero? Or is it the first day the payment is to be made? The Opening Balance date is the date from which monthly reporting to Inland Revenue will be done from in Xero. The first pay run to be run in payroll will be the one where the payment date is on or after the Opening Balances Date (the pay period may finish before the Opening Balances date, but filing to Inland Revenue is based on the payment date). Pay Rates Can I change the pay template for any increase of salary? Yes. Add a new Salary & Wages line with the new Salary amount. Can you change a monthly salary set up employee to be paid a one off hourly pay? Yes. You can adjust their payslip from within the pay run. How do I deal with staff who have a wage and commission component? Can you demonstrate? Create Earnings Pay Items with a category of "Other Gross Earnings" and a rate type of either Fixed Amount, or Rate per Unit. Then add this to the employee's pay template if it is something they earn often. When processing a pay, enter the relevant amounts.

Can you enter wages for employees on piece rates? Yes. Define Earnings Pay Items for each type of piece rate. How do you deal with an increase in salary ie if the employee receives a pay increase, is this an 'add new salary and wages' If an employee's pay is about to increase, a new Salary & Wages can be added to their Employment tab in advance. The Effective Date will let Xero know when to increase the pay and by how much in the relevant pay run. If you're setting the salary details for a part­time staff member, do you use the full­time salary figure or their pro­rated figure? Pro­rated figure. If currently using Pay Run and moving to Payroll, do we need to add all the employees again and will historical data be transferred to Payroll? As the systems are set up separately, employees will need to be reentered into Payroll, as there is no import feature. Historical information will remain in Pay Run, and only pay runs going forward from 1 April 2015 will appear in the Payroll feature. Opening Balances (i.e. the last 12 months of pay history will need to be entered into Xero, for permanent employees. Payslips Can you email out payslips? Yes. You can bulk email payslips after processing the pay run. If you pick salary as an option to show on pay slip, will it show the rate or opt out to show the rate? Each line on the payslip will show the rate, hours and total. There is no option to show annual salary on the payslip. Pricing and Support Where can I find out more information about pricing? Take a look at our blog, www.xero.com/blog/, contact support via email: payroll@xero.com or speak with your Account Manager. Can we ring for help if we need it urgently on pay day? No, our preferred method of contact is by email. If you mention in the email that the matter is of a high priority and we feel we can help you more efficiently over the phone, then we will call you. As a Partnership ­ we (my wife and I) do not have an employer's IRD number. We calculate PAYE ourselves and pay our taxes through our own personal IRD Numbers. Can we still use Xero Payroll? Potentially you could. However, with 2 employees, you would need to be on the premium plan. And there would be no need to use the Taxes & Filings tab to send the employment information to Inland Revenue. Does the discount for being a gold member apply to payroll? Yes.

Reimbursements With deductions, is there a tab for non­taxable allowances? Non­Taxable allowances, otherwise known as Reimbursing Allowances are set up under Reimbursements. Any other non­taxable amounts paid to the employee via payroll need to be set up as a Reimbursement Pay Item. How is the GST content accounted for on reimbursements? We would suggest recording the expenses (either through accounts payable, or employee expenses in Xero), then coding the Reimbursements in payroll to Suspense (or another account specifically for processing employee expenses paid from the payroll), Then in Xero, we would record the payment of the bill/expense to the suspense account. There may be other ways of handling this. The main thing to note is that the journal from Payroll does not process the GST content. With mileage, can you have a rate and let the pay run calculate the reimbursement based on the rate in the template? Not yet. When you create the Mileage Pay Item give it a name such as "Mileage @ 77c per km". When you add the Reimbursement into a pay there is the opportunity to enter a description, into which you can enter the number of kilometres. The amount to pay will need to be calculated manually. How are non taxable allowances dealt with eg tool allowance? By setting up a Reimbursements Pay Item. Can each employee enter their own reimbursements or should they still use the expense claims in xero? Until we release timesheets, employees can't enter their own reimbursements. We'd recommend that employees continue to use expense claims, especially for items that include GST. Mileage claims could be entered directly into payroll. When I enter a reimbursement for a employee will it create a bill in Xero for the company? No. See other answers above. Does the reimbursement tab link to the expense claim tab on the dashboard? No. Reimbursements are linked solely to Payroll. Reporting Will users be able to generate a Payment Summary report like in Australia? If you are talking about an Earnings Certificate for each employee, of their earnings, for the 12 months from 1 April to 31 March, the answer is yes, ideally by 31 March 2016. Can this generate Monthly Leave Provisions Not yet. As soon as possible, we will produce Leave Accrual reports and Leave Accrual journals. Tax and Tax Filing With contribution holiday for kiwisaver, does it put in an expiry date? Yes. How do you track Kiwisaver liabilities separate from PAYE, Student Loan, Child Support etc? Ideally you wouldn't track KiwiSaver liabilities separately from PAYE, Student Loan, etc, because they are all paid together to the Inland Revenue. But if you really wanted to show them separately you can

do so by changing the liability account by going to Settings, Pay Items, Statutory Deductions and clicking on the KiwiSaver Pay Item. Then select the liability account required, and click Save. Note: the KiwiSaver Voluntary Contribution (Deduction) does not get paid along with the PAYE, etc. so it defaults to a Wages Deductions Payable account. Can you ir­File with Xero Payroll? Yes. Xero will produce the files to be manually uploaded to ir­File. Inland Revenue doesn't yet provide any payroll data to ir­File directly from the software. I didn't see the PAYE pay item in the Statutory Pay Items screen? Is it there? You can select the PAYE liability account from the Organisation tab in Payroll Settings. The Employee taxes (PAYE & PDTC) and the Employer Tax (ESCT) are hard wired into the system (separately from Statutory deductions). If you add the tax code etc does it automatically calculate the PAYE so we don't have to use PAYE tables anymore? Yes. Payroll in Xero will automatically calculate PAYE in the pay run. Is there a function in Xero Payroll for automatic filing of PAYE returns to IRD at the end of each month? Or is the only option for manual filing of reports to IRD each month? The only option is for manual filing as we are not a payroll intermediary. There is no automatic filing because Inland Revenue doesn't yet allow this, but Xero payroll will produce the files that can be uploaded to ir­file (manual filing means filling out paper forms and sending them or manually entering data into ir­File. Neither are necessary using Xero Payroll). How do we enter STC and their rates in the tax tab? Select STC from the Tax Code drop down. A Tax Rate field will appear. Enter the rate specified on the letter. This should be the rate inclusive of the ACC Earner levy. What would you do if the PAYE IRD number is different to the GST IRD number? Ideally change either the GST number or the employer IRD number so that these are the same, and the same as the IRD number used for Income Tax. Before 1 April is a good time to make this change. If the change is not possible, then we'd set the GST Number in Xero to match the Employer IRD Number. At present this number doesn't get transmitted to the IRD, the GST return details are manually entered and sent. But the GST number (assumed to be the same as the Employer number) is put into the files created to be downloaded and uploaded to the IRD. We would like to know the reasons for having a different IRD number for GST and being an Employer, to better understand the potential extent of this issue. Where do you add the SLBOR code Add the "Voluntary Student Loan" Statutory Deduction into the pay template. Can you change PAYE manually when you are paying salary + holiday pay and it is more than what they would usually get paid ie. final holiday pay when someone leaves Yes. Manual PAYE adjustments can be added to the payslip. We will be providing an automatic tax adjustment for final pays, but initially the tax adjustment will need to be calculated manually. We will provide instructions. How do you reconcile monthly IR348 return to IRD gross wages vs Xero P&L when the PAYE Liability Account is a liability account? At the moment I create an IRD creditor invoice and code the DED to an expense account. The journal Xero Payroll produces is as follows: Debit the Earnings accounts, Debit the Reimbursements accounts, Credit the PAYE Liability Account (for PAYE, & PDTC), Credit the Statutory Deductions accounts (some of these are the same as the PAYE liability account), Credit the

Deductions accounts, Credit the Wages Liability Account (Net wages paid to the employees). Debit the Employer Super Accounts, Credit the Employer Super Liability Account, Debit the Employer Super Accounts with the relevant ESCT amounts, and Credit the PAYE Liability for the Total ESCT. If you still produce an Inland Revenue creditor invoice, it would now need to be coded to the liability account to bring it back to zero. Note the earnings debited to expense accounts are the total before tax earnings rather than the net wages paid to the employees. Any third party deductions are also coded to liability accounts, so would need to be treated the same as for Inland Revenue payments. Do you have a recommended separate code for Kiwisaver Employer Contributions? Yes. Does Student Loan default to 0%? No. The default rate for the 2015 and 2016 tax years is 12% over the threshold of $367 per week. What is the difference between salary sacrifice and employee contribution rate? Wouldn't you just increase the contribution rate? Salary Sacrifice is where the employee sacrifices some of their earnings to become an extra 'employer contribution'. Employer contributions are taxed using ESCT rather than PAYE. The effect is to reduce the employee's taxable earnings, which can have an effect on the employee's entitlement to other social benefits. Kiwisaver contributions ­ if an employee has chosen to opt out, can this be changed at a later date? Yes this is possible to change at a later date. How do we pay one­off pays i.e. missed someone from a pay run? You can run an unscheduled pay run. Timesheets Are you going to be able to import timesheets from WorkflowMax? At this stage, if you wanted to use Workflowmax with Payroll in Xero, you would have to manually transfer the hours worked into the pay run each time. Once the API and timesheet feature is available, we will be connecting the two so that the hours worked flow seamlessly from Workflowmax into Xero. When are timesheets likely to be added? Later in 2015. Xero Payroll Trial Can we try out payroll in the demo company? Absolutely. We recommend trialling Xero in Payroll in the Demo Company first. Is payroll now available for us to start using? During March you can setup your payroll settings and employee information and can then start processing pay runs from 1 April. When Xero Payroll becomes available is there going to be a free weeks trial? Payroll in Xero is now available to trial in the Demo Company and users on a Standard or Premium subscription can begin setting up Payroll during March at no additional cost. Is payroll available on ALL plans, including Cashbook?

No, at this stage Payroll is not available with any of the Partner Edition plans. User Permissions Can a none user still access expense claims? No, additional access is required to enter expense claims. Do you have to approve leave outside the payrun? The Payroll Admin user can process all leave requests within the pay run if required. Actually the leave requests need to be approved before going into the pay run. When staff request leave, will that be sent to their specific manager or will staff who are able to approve leave need to check for any leave being requested? After the employee requests leave, the manager will be sent an email notifying them of the request. If a leave request is approved, does it send an automatic notification to the staff member? Yes. It'll send the employee an email provided they are set up with Employee Portal access (My Payroll). If the employee has access to My Payroll, do they have access to see their notes tab? No. The notes tab will only be visible to users with Payroll Admin access. Can a leave request be sent to a manager that doesn’t have access to Xero? No. Both managers and employees would need to have access to the employee portal in Xero. When an employee has access to My Payroll (the employee portal), and doesn't have a standard Xero user role, they don't have access to the rest of Payroll or Xero. Why is it that some clients have the payroll tab and some don't? Currently, Payroll is available to users on Standard and Premium plans. It is not available for clients on Partner edition products ie Cashbooks. If the user is on Standard/Premium plan and is still not seeing the Payroll tab, the subscriber has to give Payroll Admin rights to the user. Can access permissions for payroll admin be further restricted? No. These include all access to the Payroll feature. The next user right below this is a Payroll Manager, who has access to their own payroll information and can approve leave requests.