When employees receive a wage or salary, they are subject to direct taxation, known as PAYE (pay as you earn). As an employer, it is your responsibility to deduct and remit the PAYE income tax on behalf of your employees.
For each pay cycle, it is necessary to compute and deduct PAYE. On payday, you must submit your employees’ payment information to Inland Revenue, as well as supply employee data, such as their start and end date, contact information, and date of birth, for new and departing employees.
- Directly from your accounting software, provided it has been enabled for payday filing.
- Online through Inland Revenue’s myIR service.
- On paper forms, but only if your annual PAYE and ESCT (employer superannuation contribution tax) is less than $50,000 or if you’re a new employer.
The PAYE amount you deduct is dependent on the employee’s tax code and income. Inland Revenue provides a calculator to assist you in calculating the appropriate amount to withhold.
PAYE calculator — Inland Revenue
Refer to Inland Revenue’s guidance on taxing holiday pay.
Taxing holiday pay — Inland Revenue
It is possible to rectify any inaccuracies in the employment data you have previously submitted. This can be accomplished online via Inland Revenue’s myIR service, by phone or by paper. If you file directly via accounting software or a payroll firm, you may be able to do so via the software.
Payroll giving
If you use myIR for PAYE filing and payment, your company can also offer payroll giving to employees. This allows them to contribute funds to an Inland Revenue-approved charity directly from their pay.
Payroll giving — Inland Revenue
Prevent these common PAYE mistakes:
- Inaccurate calculations – Accuracy is crucial for both you and your employees. Double-check with Inland Revenue’s calculators.
- Neglecting to inform Inland Revenue if you discover a mistake – Errors can generally be rectified with ease if you notify the appropriate authorities.
