Understanding PAYE and Employer Responsibilities

May 2, 2025

What Is PAYE?

Pay As You Earn (PAYE) is New Zealand’s system for collecting income tax from employees’ wages or salaries. As an employer, you’re responsible for deducting and paying PAYE to Inland Revenue (IRD) on behalf of your staff.

Employer's Core Responsibilities

Register as an Employer via myIR or the IR334 form.
- Register as an Employer – IRD
Keep Records:
- Maintain accurate wage, tax code, and deduction records for at least 7 years.
Make Deductions:
- Calculate and deduct the correct PAYE using IRD tax tables or the online PAYE calculator – IRD.
Payday Filing:
- You must file employment information every time you pay staff. This is called payday filing. This can be done on the myIR portal or on certain payroll software.
Pay On Time:
- Your PAYE payment schedule depends on your total annual payroll:
  - Twice a month – if your total PAYE/ESCT is over $500,000
  - Once a month (by the 20th) – if it’s $500,000 or less
  Missing a deadline may result in interest or penalties.

Employee Tax Codes

Employees must complete a Tax Code Declaration (IR330) when they start, so you can calculate their PAYE correctly. If they don’t, you must deduct at the non-notified rate of 46.67%.

What to Deduct

From each employee’s pay, you may need to deduct:

Income tax (based on employee tax codes)
KiwiSaver contributions – minimum 3% unless opted out
Student Loans: Deduct based on SL tax codes if applicable.
ACC earners’ levy (1.67% on earnings up to $152,790)
Child Support: Deduct as instructed by Inland Revenue; this takes priority after PAYE.
Other voluntary deductions – by agreement with the employee

Learn More

See the full guide on employer’s responsibilities here: IR335 – Employer Responsibilities

Need Help with Accounting? We’re Here for You!

PAYE is something you simply can’t afford to get wrong—mistakes can lead to penalties and compliance issues. If you’re feeling uncertain or need support, the team at DAD Accountant is here to help. Contact us for expert guidance on taxation, and all your accounting needs.

May 2, 2025