PAYE Deductions

Making the Correct PAYE Deductions
As an employer you must make PAYE deductions from your employees' earnings and pay those deductions to Inland Revenue by the due date each month.

To deduct the correct amount of tax:

  • Ask all employees to complete a Tax code declaration (IR330) form, in which they choose the tax code that reflects their particular circumstances

  • Deduct the amount of tax that relates to each employee's declared tax code.

The IRD PAYE calculator is available to help work out the amount of PAYE to deduct for each employee. Also available are Weekly and Fortnightly PAYE deduction tables (IR340) and Four-weekly and Monthly PAYE deduction tables (IR341) for the current tax rates.

If an employee does not complete the tax code declaration form, deduct PAYE from his or her earnings at the no-declaration rate of 46.1 cents in the dollar.

Making Deductions for Special Types of Workers
There is a range of differing requirements for deductions from payments to special types of workers such as casual agricultural workers, commission agents, directors, drovers and musterers, fishers, milkers, musicians, non-residents, partners in a partnership, shearers or spouses.

Making Payments Other than Salaries and Wages
In addition to salaries and wages, other payments you make to your employees have specific tax requirements.

These other payments include:

  • allowances e.g, benefit, reimbursing or travelling allowances

  • lump sum payments e.g, bonuses, redundancy payments

  • regular bonuses e.g, incentive or monthly bonuses

  • holiday pay

  • loss of earnings compensation

  • honoraria

  • life insurance and personal accident premiums

  • prize money at sporting events and competitions

  • accommodation provided to farm employees.