myIR, payments and more
When you get a lump sum payment or "extra pay", it can affect the amount of tax you pay. It can also affect your ACC, KiwiSaver and student loan repayments and may affect your entitlements.
Lump sum payments ("extra pay") include:
- back pay
- back-paid holiday pay
- lump sum holiday pay
- annual or special bonuses
- cashed-in annual leave
- retiring or redundancy payments
- payments for accepting restrictive covenants
- exit inducement payments
- employee share schemes benefits
How much tax and ACC contribution your employer takes out of your pay, depends on which tax code you chose on your Tax code declaration (IR330) form. You're taxed on what you earn over a whole year.
Your employer will:
- look at your earnings over the past 4 weeks up to when the lump sum in due to be paid
- take this four weeks' pay and times it by 13 to work out what your yearly earnings would be, then
- add the lump sum to the amount and work out how much tax and ACC to deduct.
If you know you’re getting a lump sum payment, talk to your employer to make sure they're going to deduct enough tax and ACC. You can ask them to deduct more tax if you think you might end up with a debt at the end of the year.
If you get a lump sum payment, you can use our Estimate your Working for Families Tax Credits calculator to work out how the lump sum might affect your entitlement.
If you do need to tell us about a change to your family income you can do it online using myIR or over the phone.
Tell us about changes to your income as soon as you can, so we can work out your entitlement and you don't get a debt.
A lump sum may affect your child support for the current and following year.
If you've estimated your income in the current year and you didn’t include the lump sum, contact us to discuss estimating your income again.
If you're a parent, the lump sum is part of the income we use to work out how much you'll pay or receive in the next year.
When you get your next year's assessment or entitlement notice, you may need to contact us. You might have to estimate your income so we can work out your child support using the right amount.
Your employer has to deduct student loan repayments from your lump sum. Check with your employer to make sure they have made a deduction, and with any old employers if you're owed lump sums from them.
If student loan repayments aren't taken out you may get a Personal Tax Summary (PTS) at the end of the year showing you need to make a student loan repayment.
Your employer should deduct KiwiSaver from your lump sum payment. Any old employers who are paying you a lump sum need to take KiwiSaver out too. You'll also be entitled to employer contributions.
If you haven't had the right amounts deducted we'll generally send you a Personal Tax Summary (PTS). The PTS will tell you what's been underpaid and how much you have to pay. If you receive Working for Families Tax Credits, you'll a get a PTS anyway.
If you don't receive a PTS you can still log in to myIR. Click Money back? and use the calculator to work out if you've paid the right amounts.
If you have left employment
If your old employer has your contact details they may get in touch with you about taxing your lump sum payment. They'll also take out ACC, student loan repayments and any KiwiSaver. If you're on a KiwiSaver contributions holiday, you'll need to let them know.