Paying tax on your salary or wage
If your income is from salary, wages, benefits or taxable pensions, your tax will automatically be deducted under the PAYE (pay as you earn) system. This means when you get your weekly, fortnightly, or monthly pay, your tax has already been deducted from it.
What is PAYE?
PAYE is the tax your employer deducts from your salary and wages. It includes:
- the tax rate for your income, and
- an ACC earners' levy
See "Find out more" below for information about tax rates and ACC earners' levy.
What you need to do
Follow these steps to pay tax on your salary or wage income:
- Give your IRD number to your employer or payer. If you don't have an IRD number, you need to complete an IRD number application - individual (IR595) form.
- Complete a Tax code declaration (IR330) form, sign it and give it to your employer. Use our decision tree to work out your tax code.
If you use any of the following tax codes, M SL, ME SL or ML SL, and earn over the pay period repayment threshold, your employer will make student loan deductions from your gross earnings.
If you use any of the following secondary tax codes, SB SL, S SL, SH SL or ST SL, your employer will make student loan deductions from your gross earnings at the secondary rate of 10%.
Note
If you don't complete a tax code declaration, your tax will be deducted at the
no-notification (formerly no-declaration) rate of 45 cents in each dollar.
What happens next
Your employer will deduct your PAYE and student loan deductions (if applicable) and pay them to Inland Revenue. It's a good idea to check you're on the correct tax code on your next payslip. If you use the wrong tax code we can write to your employer and ask them to change it.
Check the amount of PAYE you should be paying
You can check that your employer is deducting the correct amount of PAYE from each pay by using the PAYE/KiwiSaver deductions calculator under "Work it out".
Most people who earn salary or wages pay the correct amount of tax during the year. However, if you're employed for only part of the year, or have more than one job, you could be entitled to a tax refund at the end of the year.
If you think you may have paid too much, you can check this by requesting a summary of earnings. Once we’ve sent you this you can work out if you're entitled to a refund by using our Personal tax summary calculator - go to "Work it out". If you’ve paid too much (and you’re not required to file an IR3 return) you can get your refund by requesting a personal tax summary from us. See "Find out more" below for information about personal tax summaries.
How can I find out how much I earned for the year?
If you're registered for our Look at Account information service, you can view your earnings information online.
Or, you can request a summary of earnings - go to "Get it done online". Your summary of earnings shows how much income you've received and how much tax was deducted by each employer.
Note
Employees who received a redundancy payment between 1 December 2006 and 30 September 2010 may be able to claim a 6% redundancy tax credit, up to a maximum of $3,600.
Find out more
Next steps
Date published: 18 Oct 2012
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