At SmoothPay we give very careful consideration to any changes required to payroll
We gave such consideration to Payroll Giving when it was mooted by IRD but expressed our concern at how easily it could be subverted and how it could disadvantage an employee.
Consequently, after no remedial action was taken by the architects of this well-intentioned but poorly implemented initiative we determined the safeguards around Payroll Giving to be deficient, so much so that we did not implement Payroll Giving into our older payroll product.
However, due to repeated requests from employers we relented and Payroill Giving is available in both Smoothpay Gold desktop and goPayroll online. Adequate safeguards have still not been put in place and we would advise extreme care and monitoring of any Payroll Giving being processed in your (or any) payroll.
Currently, the following aspects of Payroll Giving raise significant concerns:
- An employee may give you the wrong account number (it could even be an account number they own, having nothing to do with a charity)
- The fraud potential is significant (the amount deducted may be "redirected" or not paid to the charity)
- The tax rebate is final, meaning the employee could be disadvantaged by receiving a smaller rebate on their donation than they would receive had they claimed it at the end of the year
The solution:
- A web-service or onsite lookup should be available to validate any payroll giving selection
- A clearing house must be the only method of passing on payroll giving transactions from payroll (either by electronic web-service, or by onsite form filling or file import) with the total to be direct debited from the employer's nominated bank account
We are extremely concerned that Payroll Giving in it's present form is allowed to be operated in New Zealand. At time of writing there isn't even a list of bank account numbers for registered charities available for validation purposes (this would go some way to alleviating issues with using incorrect bank account numbers, but doesn't address the real issues around such a poorly designed and unsafe system).