Research shows that up to half of Kiwi employers may not be ready for payday filing changes that come into effect today.

From today, all employers will have to file pay details to the Inland Revenue Department within two days of a person being paid - a shift from the current monthly employer schedule which typically sees them file the information on the 20th of the month after payment.

The change is designed to make it easier for the IRD to ensure payments are accurate and to enable automatic tax refunds.

A survey of 400 New Zealand employers conducted by MYOB showed that only 51 per cent of SME employers were ready for the changes.


Just over one fifth (21 per cent) say they are not ready and 28 per cent didn't know if their business would be compliant with the changes.

The research also found almost a quarter (22 per cent) of business operators find meeting their tax compliance obligations a significant pressure, although 61 per cent agreed that technology is making it easier to manage taxation and payroll compliance obligations.

The changes have sparked some controversy among business owners, who say it will add time and extra costs to payroll administration.

One small business owner this year described the change as an indirect tax that would quadruple the time he had to spend on filing information about his staff.

The Auckland-based business owner, who did not want to be named for fear of reprisals, said a job that now took him about an hour once a month would now have to be done four or five times a month.

The man has nine permanent staff, who he pays weekly.

"I just see this as another tax," he said.

An accountant has also warned the change could add up to $2000 a year in costs for small business owners.


David Harrison, a chartered accountant based in Kerikeri, said it was going to be an extra compliance burden for small businesses and could suck up a significant amount of income from their owners.

"Payday filing will not be less work. It will cost small business approximately an extra $2000 in fees a year to change to payday filing."

Harrison said that figure was based on the fact that it took about 15 to 20 minutes to calculate and enter gross wages, student allowances, KiwiSaver and child support deductions for each staff member of a company once a month.

"If this must be done four times a month instead of once, there will be an average of 45-60 minutes extra per month.

"A conservative chargeout rate of $150 an hour would see $1800-plus a year being added on to a client account," he said.