myIR, payments and more
Special employment benefits such as prize money; loss of earnings compensation; life and personal accident insurances; and honoraria may be subject to PAYE or withholding tax.
If you pay the premiums of life insurance policies for an employee, and the proceeds of that policy go to them, you treat the premiums as salary and wages. If the proceeds are payable to you, the premiums are not taxable.
Honoraria are payments made for service where the usual custom is that the price is not set. Examples include payments to mayors, chairpersons, and members of local bodies, clubs, societies and organisations.
Compensation for loss of earnings paid by ACC to your employees is liable for PAYE.
You must deduct withholding tax from prize money at any sporting event or competition, not just professional events. The prize money threshold is $500. For any amount won over this threshold, you must deduct withholding tax of 20%.