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Payroll support desk frequently asked questions

Within the current specification, there is no mention of when the new PAYE rates, thresholds and the transition of the low extra pay rate indicator from 21% to 12.5% of extra pay should be enforced on

The changes are all effective 1 April 2010.

This is summarised in the payroll specification on page 5, 1.2.1.

What happens with pay periods ending between 1 April 2010 and 31 March 2011?

Pay periods of one month or less that span 1 April 2010 will use the new rates and will be included on the April EMS.

If the pay period is longer than one month, then the pay must be apportioned. The portion that was for the period to 31 March 2010 will be taxed at the current rates. The portion from 1 April 2010 will be taxed at the new rates.

Has the legislation been changed so that the earners' levy maximum of $110,018 (for 2011) applies to secondary income, or should the maximum still only apply to main tax codes?

The ACC maximum earners' levy does apply to secondary lump sums.

It does not apply to ordinary secondary pays, as they are taxed at a flat rate and there is no gross up, and therefore no calculation or approximation of annual income.

It is also important to remember that the existing process for taxation of lump sums does not differentiate between primary and secondary tax codes and the ACC maximum still applies. In that sense there is no change to the existing process.

Date published: 29 Mar 2010

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