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-notification rate of 45 cents in the dollar.
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
For employees, 16 years and older, the minimum wage rate is $15.25 per hour. For new entrants and employees on the training minimum wage, the rate is $12.20 per hour
As soon as an employee starts working for you, they must complete a Tax Code Declaration form (IR330) which tells you the rate of PAYE or tax to deduct including student loan repayments. As an employer, you are legally required to use a no-notification rate when an employee or person receiving salary, wages or scheduler payments fails to complete a Tax Code Declaration Form.
The no-notification rate is:
YOUR TAX OBLIGATION WHEN YOU EMPLOY CHILDREN
If you employ school children, you must deduct PAYE from their wages and complete a Tax Code Declaration form (IR330). Inland Revenue define a child as anyone who:
- Is 14 or under, or is 15, 16, 17 and still attending school, or
- Turned 18 on or after 1 January in the previous tax year and continued to attend school (including a school for people with disabilities), but excluding tertiary institutions)
LUMP SUM PAYMENTS FROM PRIMARY EMPLOYMENT
Lump sum payments (or “extra pays”) include annual bonuses, annual leave cash-up, retiring or redundancy payments, back-pay, payments for restrictive covenants or exit inducements and gratuities
MEET OUR WAGES TEAM
Michelle Weller is our Payroll Officer, for our Morrinsville and Thames clients. Nicky Cody attend to wages for our Matamata clients. Please contact them with any wage queries you may have. They will be only too happy to help.
Return to Tax Facts