As a New Zealand business owner, youโre obliged to learn your employer responsibilities to the IRD. But with the help of learning PAYE tax rates, PAYE tables and PAYE deduction tables, youโll understand them in no time.
There are intricacies to calculating and paying tax on behalf of employees, depending on pay periods, individual employee circumstances and pay brackets.
Before we get into using weekly, fortnightly, and monthly tax tables for employee payments, letโs find out whatโs fundamental to it all โ PAYE.
What is PAYE?
PAYE stands for โpay as you earnโ. As an employer, you must deduct PAYE from your employeeโs renumeration and pay it to the Inland Revenue Department (IRD) on their behalf.
- PAYE refers to the combined income tax and ACC earnersโ levy.ย
- There are different rates of PAYE depending on the employeeโs renumeration and other conditions.
- On top of PAYE, you might have to deduct other amounts such as student loan repayments, child support and KiwiSaver deductions.
ACC earnerโs levy
All employees must pay the ACC levy which covers no-work injuries. The earnersโ levy deduction is $1.60 GST-inclusive per $100 of earnings.
Student Loans
Employers are required to deduct student loan repayments through the PAYE system, at the standard deduction rate. Employees can also request that an employer deducts additional funds to pay off a student loan quicker.
KiwiSaver
KiwiSaver is a voluntary long-term savings scheme designed to help an employee put money away. Employers must deduct this in their PAYE activity and enrol the employees in the scheme.
PAYE calculator
An exceptionally simple and compliant way to understand your PAYE obligations is to follow the on-page instructions and use the IRDโs PAYE Calculator here.
Employerโs PAYE responsibilities
As a New Zealand business owner and employer, your PAYE responsibilities are as follows:
- You must have first registered for an IRD number.ย
- You must fill in an โEmployment Information โ IR348โ form complete with details of deductions you have made from your employeesโ renumeration. If the employers gross annual PAYE (including ESCT) deducted is $50,000 or more, employers must file this information electronically. More information on employee information and payday filing here.
- Employees must now deduct PAYE from all employeeโs renumeration and pay to the IRD before the due date.
From April 1 2025, there are four tax brackets and rates:
| Tax rate | Taxable income bracket | โTax owed |
|---|---|---|
| 10.5% | $0 to $15,600 | 10.50% of taxable income |
| 17.5% | $15,601 to $53,500 | $1,638 plus 17.50% of the amount over $15,600 |
| 30% | $53,501 to $78,100 | $8,271 plus 30.00% of the amount over $78,100 |
| 33% | $78,101 to $180,000 | $15,651 plus 33.00% of the amount over $78,100 |
| 39% | $180,001 or more | $42,277 plus 39.00% of the amount over $180,000 |
PAYE: Deduction tables
If youโre starting a business and need to understand your exact PAYE responsibilities as an employee, youโll need to refer to the IRDโs deduction tables.
These PAYE deduction tables are designed to adapt to the specific pay periods your business has chosen as a way of distributing employee renumeration.ย
You can either pay an employee weekly, fortnightly or monthly. The below tables are designed to cover employers PAYE responsibilities across all such pay periods.
Weekly tax tables
If you pay your employee weekly and require information on weekly tax tables, see the IRDโs tax table guide here.
Fortnightly tax tables
If you pay your employee fortnightly and require information on fortnightly tax tables, see the IRDโs tax table guide here.
Monthly tax tables
If you pay your employee monthly and require information on four-weekly or monthly tax tables, see the IRDโs tax table guide here.
For all further information on PAYE, see the IRD website here.
