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PAYE Guide — Pay As You Earn Tax System in New Zealand

the New Zealand PAYE system. The guide covers the employer obligation to deduct the PAYE each pay period, the IRD tax codes, the PAYE calculation methods, and the employer reporting through the Employment Information (EI) system. The employers must deduct the PAYE from the salary and the wages and pay the deductions to the IRD by the 20th of the following month.

How PAYE Works

The PAYE (Pay As You Earn) system is New Zealand's method of collecting income tax at source. Employers deduct tax from each pay period based on the employee's tax code and pay it to the IRD. The deductions include: (a) the income tax at the marginal rates, (b) the ACC earner levy (1.53% of gross earnings), (c) the KiwiSaver employee contributions (3%, 4%, 6%, 8%, or 10%), (d) the student loan repayments (12% of income above the threshold), and (e) the child support deductions if applicable. The employer must file the Employment Information (EI) each pay day through the myIR system.

Tax Codes and Rates

The employee provides the IR330 tax code declaration form. The main codes include: M and ME for the main employment, S and SH for the secondary employment, ST and SB for the secondary with the student loan, CA for the casual agricultural work, ED for the emergency employees, and the NS (the "no notification" rate of 45%). The employers must also calculate and pay the employer KiwiSaver contribution (3% minimum) and the ESCT (the Employer Superannuation Contribution Tax) on the KiwiSaver contributions above the minimum.