PAYE on Salaries & Wages
Pay As You Earn (PAYE) is the basic tax taken out of your employees' salary or wages. The amount of PAYE you deduct depends on each employee's tax code.
PAYE employees must complete a Tax code declaration (IR 330) as soon as they start working for you. If an employee fails to complete the tax code declaration, you must deduct PAYE at the no-declaration rate.
Employers must also file an employer monthly schedule with IRD detailing each worker's gross earnings and deductions. Employers with gross annual PAYE of $100,000 or more must file this schedule electronically with IRD using IRD’s IR File system.
If you are a ‘small employer’ with gross annual PAYE deductions of up to $500,000, payments are made to IRD on the 20th of the month following the deductions. The employer monthly schedule must also be filed by the 20th of that month
- If you are a ‘large employer’ with gross annual PAYE deductions over $500,000, the deductions made from payments made to employees between the:
1st and the 15th of the month are paid by the 20th of the same month.
- 16th and the end of the month are paid by the 5th of the following month (except for December payment to be made by 15 January). The employer monthly schedule must also be filed by the 5th of that month
Administering your payroll can be time-consuming and divert you from the core activities of your business. Payroll and employment legislation is growing increasingly complex. CooperAitken can relieve you of this burden by providing a comprehensive and confidential payroll service.
ML and ML SL are obsolete from 1 April 2013. employers should replace these with M or M SL, unless the employee has given you a new tax code declaration (IR330).
For more see IRD website
For employees 16 years and over, $14.75 per hour
For new entrants and employees on the training minimum wage, $11.80 per hour
Children Working changes 1st April 2014
If you employ school children, you must deduct PAYE from their wages.
As a child working you must complete a tax code declaration (IR330).
Student Loans Changes 1st April 2012
From 1st April 2013 the repayment rate for student loan deductions increase from 10cents to 12 cents. The voluntary repayment bonus has been removed.
All Student Loan borrowers are required to have a student loan (SL repayment code).
There is a new IR330 Tax Code Declaration form which will need to be completed.
For exemptions and Student Loan Codes click here
KiwiSaver Tax Changes
The minimum contribution rate for employers and employees increases from 2% to 3% of gross salary or wages from the first pay period commencing on or after 1 April 2013
Government contribution to half contributing 50c for every $1 contributed by individual, to a maximum of $521.43 per year
Employer's contribution to be taxed at a rate equal to the individual's marginal tax rate. From the 1st April 2012 employer's contribution is no longer exempt from ESCT (Employer Superannuation Contribution Tax).
This will not cost the employer any more. The tax amount will be deducted from their Kiwisaver contribution.
As an employee you can still select to pay a higher contribution of 4% or 8%.
If you are under 18, enrolled for KiwiSaver and receive a wage you must make KiwiSaver employee contributions, but employers do not need to make the employer contribution of 3%.
https://interact1.ird.govt.nz/forms/payecalculator/ PAYE/Kiwisaver calculator (make sure you select the correct income tax year)
Other changes 1st April 2012
ACC Earner Levy changes - this has reduced from $2.04 to $1.70 per $100 of gross earnings, see work it out calculators and PAYE deduction tables above.
Employment Relations Act and Holiday Act Changes effective from 1st April 2011
The main changes include:
Employers can now offer their staff the choice to cash in one week of their annual holiday entitlement. This ‘week’ can be spread over the entitlement year.
It is now possible for public holidays to be transferred to another working day. Employer and the employee must be in agreement and requests must be made in writing. This gives great flexibility to manage the needs of the business and individual requirements for these days. However this cannot reduce the number of public holidays your staff member is entitled to.
The 90 day trial period has been extended to employers irrespective of the number of staff they have. So with the correct employment contract in place a new employee who is given notice before the end of trial period cannot raise a personal grievance on the grounds of unjustified dismissal. Note, however that this does not stop them raising grievances on other issues
Other changes include:
- Changes to the personal grievance provisions
- Requiring consent to be given before a union can access a workplace, and confirming communication with employees can occur during collective bargaining.
- Requiring employers to retain employment agreements
- Extending the role and powers of labour inspectors.
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