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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.
All employees must complete a tax code declaration. Contractors receiving schedular payments must complete a tax rate notification.
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.
There are different ways of calculating PAYE for non-residents and other special types of workers.
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. Most employer superannuation contributions are subject to employer superannuation contribution tax (ESCT). Employers must also use the PAYE system to deduct employees' KiwiSaver contributions.
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).
Employers must deduct tax on schedular payments (formerly withholding payments) from contractors performing activities outlined in schedule 4 of the Income Tax Act 2007. From 1 April 2010, there are legislative changes that impact contractors working in the horticulture and viticulture industries.
Sometimes your employee chooses the wrong tax code when they complete their Tax code declaration (IR330). We'll let you know which employees are using incorrect tax codes and what code they should be on.