Payroll
Employers must deduct PAYE, including tax on schedular payments (formerly withholding payments) from payments made to staff or contractors. Deductions may also be needed for student loan repayments, child support, Kiwisaver, or any benefits, bonuses or other allowances that you pay.
Tax codes
All staff and contractors receiving schedular payments must complete a tax code declaration. This tells the employer the rate of PAYE to deduct or any student loan repayments.
Accounting for allowances and benefits for staff
Holiday pay, bonuses, allowances, and special benefits paid to employees such as loss of earnings compensation or life insurance premiums are usually liable for tax.
Special types of workers
There are different ways of calculating PAYE for non-residents and other special types of workers.
Deductions from salaries and wages
There are tools available to help employers calculate PAYE and student loan repayment deductions. If child support deductions must be made, we will inform you of the amount. Employer superannuation contributions (ESCT), formerly specified superannuation contributions withholding tax (SSCWT), are subject to tax. Employers must also use the PAYE system to deduct employees' KiwiSaver contributions.
Fringe benefits
Most benefits paid to employees in addition to their salary or wages, for example motor vehicles or low-interest loans, are liable for fringe benefit tax (FBT).
Tax on schedular payments
Employers must deduct tax on schedular payments (formerly withholding payments) from payments made to self-employed contractors, and to companies operating in the horticultural and viticultural industries unless the contractor holds a current certificate of exemption from tax on schedular payments.
Correcting employee tax codes
If an employee is using an incorrect tax code we will send their employer a letter asking them to correct their employee's tax code.
Date published: 16 Sep 2004
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