Payment of Tax

Paying Employer-related Taxes
The PAYE you deduct from your employees' salary or wages does not at any stage belong to you.

Remember that.

To avoid serious consequences including being fined or being imprisoned, use PAYE deductions only for payment to Inland Revenue and pay them by the due date. Every month you must file an Employer monthly schedule (IR348) detailing each worker's gross earnings and deductions.

If you're a small employer with gross annual PAYE deductions of less than $100,000, the schedule and payment are made on the 20th of the month following the deductions.

If you are a large employer with gross annual PAYE deductions of $100,000 or more, the deductions made from payments made to workers between the:

  • 1st and the 15th of the month - pay by the 20th of the same month.

  • 16th and the end of the month – pay by the 5th of the following month (except that December payments can be made by 15 January following).

  • The employer monthly schedule is filed on the 5th of the following month.

Maintaining an up-to-date wage book detailing each employee's payments and deductions will assist you in filing the employer monthly schedule. At the end of each month, total the figures in the wagebooks complete the employer monthly schedule and transfer the total to your cashbook.

Early Payment Discount

From the income year beginning 1 April 2005, a 6.7% discount of tax has been introduced to encourage individuals who begin receiving self-employed or partnership income to pay tax voluntarily in the year before they begin paying provisional tax.

To qualify, individuals have to:

  • Be either self employed or a partner in a partnership;

  • Derive gross income predominantly from a business (not being interest, dividends, royalties, rents or beneficiary income);

  • Not be required to pay provisional tax in the income year;

  • Make a voluntary payment of income tax before the end of the income year (31 March for a March balance date taxpayer);

  • Elect to receive the discount within the timeframe for filing a return of income for that income year (there will be a tick box on the IR 3 income tax return from the 2006 year onwards);

  • Have not been liable to pay provisional tax in the prior four years;

  • Have never received an early payment discount (note however that there is a concession to enable taxpayers to claim the discount again where they have ceased to receive self-employed or partnership income for a period of four years and then begin a new business).

The discount is calculated at the rate of 6.7% on the lesser of the amount paid during the year or 105% of the end-of-year residual income tax liability.