Tax Facts – PAYE on Salaries and Wages
Pay As You Earn (PAYE) is the basic tax taken out of your employees’ salary or wages. The amount of PAYE you deduct depends on each employee’s tax code.
PAYE employees must complete a Tax code declaration (IR 330) as soon as they start working for you. If an employee fails to complete the tax code declaration, you must deduct PAYE at the no-declaration rate.
Employers must also file an employer monthly schedule with IRD detailing each worker’s gross earnings and deductions. Employers with gross annual PAYE of $100,000 or more must file this schedule electronically with IRD using IRD’s IR File system.
If you are a ‘small employer’ with gross annual PAYE deductions of up to $500,000, payments are made to IRD on the 20th of the month following the deductions. The employer monthly schedule must also be filed by the 20th of that month
- If you are a ‘large employer’ with gross annual PAYE deductions over $500,000, the deductions made from payments made to employees between the:
1st and the 15th of the month are paid by the 20th of the same month.
- 16th and the end of the month are paid by the 5th of the following month (except for December payment to be made by 15 January). The employer monthly schedule must also be filed by the 5th of that month
For more information regarding PAYE or to register as an Employer either call us or visit the IRD website.
A new system called payday filing is being introduced for the way businesses report payroll information. From 1 April 2018, employers may opt into payday filing. From 1 April 2019, payday filing is mandatory.
From 1 April 2019 employers must:
- File employment information within 2 working days after every payday instead of an Employer monthly schedule (IR348).
- Provide new and departing employees’ address information, as well as their date of birth – if they have provided it to you.
- File electronically (from payday compatible software or through myIR) if your annual PAYE/ESCT is $50,000 or more.
Note: The due date for payment remains the same at the 20th of the month (or 5th and 20th of the month for twice-monthly filers).
Contact us for more information or visit the IRD website.