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Employer responsibilities Ngā kaiwhakawhiwhi mahi takohanga

Correcting employee tax codes

Sometimes your employee chooses the wrong tax code when they complete their Tax code declaration (IR330).

We often check the details on your Employer monthly schedule (IR348) or Employment information (EI) schedule to make sure your employees are on the right tax code. This is to make sure you deduct the correct amounts from your employees' salary or wages.

We'll let you know:

  • which employees are using incorrect tax codes, and
  • what code they should be on.

What you need to do

When you receive a letter from us you need to:

  • change the employee's tax code to the code we tell you from the next pay period, and
  • deduct tax based on the new tax code.

If you're changing an employee's tax code halfway through a month, don't use two lines for the one employee on the IR348 or EI. You'll need to:

  • add the total gross earnings
  • add the total PAYE
  • use the new tax code.

You're legally required to change your employee's tax code to the one we tell you to use.

Why you need to do this

Using the correct tax code can help your employee avoid:

  • a tax bill at the end of the year, or
  • an underpayment of their student loan repayment obligation.

If your employee doesn't agree with the change in tax code

If your employee thinks their tax code is already correct, have them contact us. We can work out the best tax code for their situation.

If we agree your employee should remain on their current code you can change it back to the code they were on. Your employee can complete a new IR330 to confirm this.

If you haven't sent your IR348 or EI and payment to us, you can change the details to what they should've been. Give the deduction difference back to your employee.

If you've already sent your IR348 or EI and payment to us you can:

  • complete an Employer schedule amendments (IR344) form, or
  • contact us.

You can change the details to what they were supposed to be and request a refund of any overpaid:

  • tax, or
  • student loan deductions.

You can then pay this to your employee.

You're employee can square up their tax position at the end of the year.