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Payroll giving for employers
You can offer payroll giving so your employees can make charitable donations as part of your payroll system.
What's on this page
Payroll giving lets your employees:
- donate to an approved donee organisation of their choice - direct from their pay, and
- get a tax credit for payroll donations when they get paid - instead of waiting until the end of the tax year.
Approved donee organisations
An approved donee organisation has been granted donee status by us. Any organisation on the approved list is eligible to receive payroll giving donations.
When you offer payroll giving to your employees, you need to:
- deduct the requested donation amount from the employee's salary or wage
- work out the tax credit for payroll donations for each donation made
- record the tax credit for payroll donations for each employee on your return. Depending on how you file, this will be the:
- Employer monthly schedule (IR348) if you use ir-File, or
- Employment information schedule if you're a payday filer.
- pass the donations to the chosen donee organisation within the specified timeframe
- advise the donee organisation the donation is from payroll giving, and
- keep records of all donation amounts, tax credits for payroll donations, donee organisations, and payment dates.
When you need to pass on payroll giving donations to the donee organisation depends on:
- how of you file your employer returns, and
- the last day of the pay period the deduction was made in.
If your employees want to join your payroll giving scheme, they need to:
- check the donee organisation they want to donate to is an approved donee organisation, and
- give you the:
- name of the donee organisation
- amount of the donation they want to make
- pay period(s) they want the donation to be made, and
- donee organisation's bank account details or postal address.
If your scheme allows, the frequency, amount and donee organisation chosen can change at the employee's discretion.
If the donee organisation is not on the approved list
Although your employee needs to check the donee organisation they want to give to is on the approved list, it's a good idea to check yourself before passing on the donation.
You don’t have to pass on a donation if an organisation is not on the approved list. If you don’t pass it on, give it back to the employee. If you do pass it on, it won't be considered a payroll giving donation and no tax credit for payroll donations is allowed.
The tax credit for payroll donations is worked out when a donation is deducted from an employee's salary or wage. The amount of the tax credit is 33.3333% of the amount donated.
Once you've worked out the tax credit, reduce your employee's PAYE by that amount - giving them more money in the hand.
Example of payroll giving and the tax credit reducing PAYE
$3.33 ($1 x 33.3333%)
You can update your return if you've filed it with incorrect tax credits for payroll donations information.
Send us a message in myIR including the:
- employee's IRD number
- pay period date, and
- correct tax credit amount.
Don't use the Employer monthly schedule amendments (IR344) form to correct tax credit for payroll donation information.
Keep donation receipts
You must keep all receipts you receive from donee organisations for donations made under payroll giving. Don't:
- include them as donation receipts for your business or individual tax purposes, or
- give them to the employee who made the payroll donation.
There are two situations when we won't allow a tax credit for payroll donations.
- Your employee made a donation to an organisation not on the approved list.
We'll reduce your employee's end of year PAYE tax credit by the same amount disallowed.
- You didn't pass the donation on within the specified timeframe.
The disallowed amount decomes a PAYE debt for you. We may charge interest, late payment penalties, and shortfall penalties.