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Four-weekly and monthly PAYE deduction tables - PDF
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1 IR341 April Four-weekly and monthly PAYE deduction tables Tax tables for pay periods between 1 April 2016 and March
2 2 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES GENERAL Contents Introduction Changes to note Need to talk to us? 0800 self-service numbers Part 1 General Employer responsibilities Declarations and tax codes Independent earner tax credit (IETC) ACC earners' levy Student loan repayments Student Loan extra deductions Schedular payments KiwiSaver Running totals Late payment Part 2 Using these tables How to calculate employee PAYE deductions Other than four weekly and monthly pay periods No-notification rate Holiday pay Lump sum payments Casual agricultural employees and election day workers Non-resident seasonal workers Rate of tax deducted from schedular payments (shortened version) Go to our website for information, services and tools. myir Secure online services log in to file your EMS, IR3 or GST return or registration; manage your student loan; view your account balances and transactions; view or update your personal or family details and income, request or confirm your PTS and send us secure mail. Demonstrations view online demonstrations of some of the tasks you can complete using your myir secure online services ID and password. Get it done online complete and send us forms and returns, make payments, make an appointment to see us and give us feedback. Work it out use our calculators, worksheets and tools to help you manage your tax business like checking your tax code, or your filing and payment dates. Forms and guides download our guides, and print forms to post to us. You can also check out our newsletters and bulletins, and have your say on items for public consultation. How to get our forms and guides You can view copies of all our forms and guides mentioned in this guide by going to and selecting "Forms and guides". You can also request copies by calling When to use these tables These PAYE tables should be used for pay periods ending on or after 1 April If your pay period ends before 1 April 2016 but your payday falls on or after 1 April 2016 you should use the PAYE tables applying from 1 April Part 3 Four-weekly pay periods 16 Part 4 Monthly pay periods 77 Part 5 Secondary earnings (includes all Secondary tax codes) 128
3 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 3 Introduction PAYE stands for "pay as you earn". Employers must deduct PAYE from the earnings of people who work for them and pay it to us. This booklet tells you how to work out the amount of PAYE to deduct. PAYE means the combined income tax and ACC earners' levy, unless otherwise stated. This booklet also covers all the different rates you may need to use. Besides PAYE, there are other amounts you may have to deduct from your employees' pay these include student loan repayments, child support* and KiwiSaver deductions. * Child support deductions are not included in this booklet. You can also use our website PAYE calculator to calculate PAYE on an employee's gross wages. Or, if you've paid an amount to an employee, the calculator will work out how much PAYE you'll have to account for on the amount paid. Changes to note From 1 April, the following change came into effect: the ACC maximum earnings on which the ACC earners' levy is charged increased to $122,063 the rate at which the ACC earners' levy is charged decreased to $1.39 per $100. Employer's guide (IR335) Our Employer's guide (IR335) will help you fulfil your obligations as an employer. It explains how to deduct PAYE, child support, student loan and KiwiSaver deductions and how to forward these payments to us. It also has further information on the changes. Need to talk to us? You can call us on these numbers: General tax, tax credits and refunds Employer enquiries General business tax Overdue returns and payments We're here to take your call between 8 am and 8 pm Monday to Friday and Saturday between 9 am and 1 pm. Remember to have your IRD number with you when you call. For more information go to (search keywords: contact us) self-service numbers This service is available seven days a week (any time, except between 5 am and 6 am) for a range of self-service options. Remember to have your IRD number with you when you call. For personal information, such as account balances, you'll also need a personal identification number (PIN). You can get a PIN by calling and following the step-by-step instructions. Order publications and taxpacks Request a summary of earnings Request a personal tax summary Confirm a personal tax summary All other services GENERAL
4 4 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES GENERAL Part 1 General Employer responsibilities All employers must register with us and have an IRD number. If you haven't registered as an employer complete an Employer registration (IR334) form. Employers must deduct PAYE from all remuneration paid to employees. This PAYE, plus any student loan repayments, child support payments and any ESCT (employer superannuation contribution tax), must be paid to us by the due date. All employers must fill in an Employer monthly schedule (IR348) with details of deductions made from their employees' pay. If the employers gross annual PAYE (including ESCT) deducted is $100,000 or more, employers must file their monthly schedule electronically. For more information on electronic filing visit our website 'Get it done online'. Declarations and tax codes All new employees must complete a Tax code declaration (IR330) when they start working for you. If an employee wants to change their tax code they must complete a new IR330, reading the notes on the form, to work out their new tax code. You must keep all completed IR330's for seven years after the last wages payment is made to the employee. Special tax codes An employee may provide you with a Special tax code certificate. This shows a particular rate you must use for their PAYE. This rate isn't included in these tables. The rate shown will include ACC earners' levy, unless the income isn't liable. The special tax code certificate may also include a Student loan special deduction rate certificate or a Student loan repayment deduction exemption certificate for an employee who has a student loan. Follow the instructions on the certificate for the rate to use. Note Companies or contractors carrying out contracts in the agricultural, horticultural or viticultural industries may hold a Special tax code certificate. Independent earner tax credit (IETC) The IETC is a tax credit for individuals who are New Zealand tax residents, and whose annual income is between $24,000 and $48,000. To be eligible to use this tax code your employee: or partner must not be entitled to working for families tax credits or partner must not receive an overseas equivalent of working for families tax credits must not receive an income tested benefit, NZ super, veterans pension or an overseas equivalent. To receive the IETC weekly as part of their pay, employees will need to select a new tax code on a Tax code declaration (IR330). If they are unsure if they will qualify they can continue to use the same tax code and request an end-of-year square-up from Inland Revenue. They can only choose a new tax code for their main source of salary/wage income The tax codes are: ME for non-student loan borrowers who qualify, and ME SL for student loan borrowers who qualify. ACC earners' levy All employees must pay an ACC earners' levy to cover the cost of non-work injuries. They must also pay an earners' account residual levy to fund the cost of non-work injuries claimed from 1 April 1992 to 30 June We collect these on behalf of the Accident Compensation Corporation (ACC). For PAYE purposes, the earners' levy deduction includes both the earners' levy amount and the earners' account residual levy amount. The earners' levy (including the earners' account residual levy) is already included in the PAYE amounts so you don't have to do any extra calculations. ACC rates The earners' levy deduction is $1.39 GST inclusive per $100 of earnings. ACC maximum earnings The maximum earnings on which the earners' levy deduction is payable is $122,063. For more information on the certificates see our Employer's guide (IR335).
5 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 5 For the tax code M, the earners' levy deduction: in the four-weekly table is not deducted on four-weekly salary or wages greater than $9,392. in the monthly table is not deducted on monthly salary or wages greater than $10,175. The maximum is not applied to PAYE on: regular secondary income casual agricultural employee payments election day workers' earnings earnings on which the no- notification rate is used. Schedular payments are subject only to a tax deduction. People or entities receiving schedular payments are responsible for paying their own ACC levies. Remember, these tables already have the earners' levy built into them. If your employees pay is greater than the amounts shown in the tables then the examples at the end of each section will show how to calculate the PAYE. Student loan repayments Employers are required to deduct student loan repayments through the PAYE system, at the standard deduction rate, when an employee completes a Tax code declaration (IR330) using one of these codes: M SL, ME SL, SB SL, S SL, SH SL or ST SL. Employees with student loans who only have one main job should use the M SL or ME SL code. This code includes student loan repayments which are set at the standard deduction rate of 12 cents in the dollar for every dollar earned over the pay period repayment threshold, eg, $367 per week. Where an employee uses SB SL, S SL, SH SL or ST SL codes, the tables deduct student loan repayments at 12 cents in the dollar from every dollar earned. Employers also need to deduct student loan repayments at this rate from redundancy and lump sum payments. Note An employee may provide you with a: Student loan special deduction rate certificate requesting student loan repayments be made at a different rate calculate deductions at the rate shown. Student loan repayment deduction exemption certificate requesting no deductions be made. Don't deduct student loan repayments for casual agricultural employees, election day workers, people on schedular payments or people on the no- notification rate. There are penalties for failure to deduct or account for student loan repayments. For more information on how to account for student loan repayments go to or see our Employer's guide (IR335). Student loan extra deductions Your employees may ask you to make extra deductions to pay off their loan faster or we may ask you to make compulsory extra deductions to catch up on an underpayment. These deductions are in addition to the amount you normally deduct using the student loan repayment code they've given you. You must show extra deductions separately on your Employer monthly schedule (IR348). Use one of the following student loan repayment codes to identify who requested the extra deductions: 1. SLBOR employee requests voluntary extra deductions 2. SLCIR we request you to make compulsory extra deductions. Schedular payments There are different rates of tax on schedular payments, which depend on the type of work being done. The rates are listed on page 15 of this booklet and on page 4 of the Tax code declaration (IR 330). Find the rate which applies to the work being done and deduct tax at that rate from the gross payment. Note If the person or entity working for you is GST-registered please show the GSTexclusive amount on the employer monthly schedule. For more information see our Employer's guide (IR335). KiwiSaver KiwiSaver is a voluntary, long-term savings initiative. As an employer, you'll need to provide employees with information about KiwiSaver, deduct KiwiSaver contributions from their pay and contribute a percentage of your employees' salary and wages as employer contributions. All employers are required to enrol all new eligible employees into KiwiSaver, unless an exemption applies. GENERAL
6 6 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES GENERAL Employee deductions All eligible salary and wage earners must complete a KiwiSaver deduction form (KS2) when they start working for you. You must keep this form for seven years, along with other wage records. This form will include the rate at which your employee has elected to have KiwiSaver deductions made from their pay, either 3%, 4% or 8%. If employees who are subject to automatic enrolment do not supply you with a KS2 form, the default deduction rate is 3% of their gross salary or wages. Employer's superannuation cash contribution (employer contribution) An employer contribution is a monetary amount paid to a superannuation fund, by an employer, for the benefit of their employees'. It does not include an employee deduction. You must contribute a minimum of 3% of your employees' gross salary or wages. All employer contributions paid to a superannuation fund, including KiwiSaver schemes and complying funds, for the benefit of an employee are liable for ESCT (employer's superannuation contribution tax). The exception to this is if the employee and employer have agreed to treat some or all of the employer contribution as salary or wages under the PAYE rules. We have updated the PAYE tables to make it easier for you to calculate your compulsory employer contributions (CECs) and ESCT. You can find these under the column "Net CEC and ESCT". Employer monthly schedule (IR348) form: Only show your net employer contributions in the Net KiwiSaver employer contributions column on the Employer monthly schedule (IR348). Employer deductions (IR345) form: Monthly rolled-up totals (or fortnightly for large employers) must be transferred to the Employer deductions (IR345) form. ESCT, KiwiSaver deductions and Net KiwiSaver employer contributions (net of ESCT) are all shown separately. How to tax employer contributions There are two options for calculating and withholding tax on employer contributions: If the employer and employee agree, the amount of employer contribution can be treated as the employee's salary or wages and PAYE must be deducted. In all other cases, ESCT must be withheld. ESCT is calculated at a rate based on the employee's total annual salary or wages plus gross employer contributions for the previous tax year (1 April to 31 March). When employees haven't worked for the employer for the full previous tax year, the rate is based on the employer's estimate of the employee's total salary or wages plus gross employer contributions they will receive in the tax year for which the ESCT is being calculated. Employee's salary or wage income for year ended ESCT from 1 April March 2016* $0 $16, $16,801 $57, $57,601 $84, $84,001 upwards 0.33 Note Employers paying into a defined benefit fund can choose to apply ESCT at the flat rate of 33 cents in the dollar. ESCT is calculated on the whole dollar and is withheld from the gross employer contribution. Four-Weekly Pay Periods $1,764 to $1,920 1, , , , , , , , , , , , , , , Example Employee has gross earnings of $1, and an ESCT rate of 17.5% Gross employer contribution (3%) $53.76 ESCT is applied to the whole dollar (ie, $53.00 in this example) $53.00 x 17.5% = $9.27 ESCT Minus the ESCT from the gross employer contribution $ $9.27 = $44.49 Net CEC
7 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 7 Calculating grossed-up employer contributions In some cases an employer may be "locked in" to an employment agreement where they contribute a set percentage of their employees' salary. In these cases it may be necessary to gross up the employer contribution so the employee receives their full entitlement. Example The employer has an agreement with his employee to pay a net amount of $1, to the employee's superannuation fund and the employee has an ESCT rate of 30%. Using the formula: ESCT = a (1-a) b a = ESCT rate b = employer contribution 0.30 x 1,000 = $ (1-0.30) Gross employer contribution $1, Every month the amount owing remains unpaid after the due date we'll charge a further 1% incremental penalty. Interest and late payment penalties are not charged on outstanding amounts of $100 or less. Arrangements If you're unable to pay your tax by the due date, please call us. We'll look at your payment options, which may include an instalment arrangement, depending on your circumstances. Arrangements can be agreed on, before or after the due date for payment. There are greater reductions in the penalties charged if the arrangement is made before the due date. For more help See our guide Penalties and interest (IR240). GENERAL For more information about ESCT see your Employer's guide (IR335) or for information about KiwiSaver go to: Running totals Running totals are your gross earnings and PAYE deductions paid since 1 April. You can check your running totals for the current and the immediately preceding tax year by calling our 0800 self-service see page 3. Late payment We may charge you interest if you don't make your tax payment by the due date. We'll also charge you a late payment penalty if you miss a payment, but if you have a good payment history with us we may contact you before we do this. If your tax remains unpaid, we'll charge an initial 1% late payment penalty on the day after the due date. We'll charge a further 4% penalty if there's still an amount of unpaid tax (including penalties) seven days after the due date.
8 8 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES USING THESE TABLES Part 2 Using these tables The PAYE tables shown in this booklet are for four-weekly and monthly pay periods and secondary employment. Four-weekly and monthly Use these tables to calculate how much PAYE to deduct from primary employment earnings for four-weekly and monthly pay periods. To calculate PAYE for pay periods other than four-weekly or monthly, see page 9. The PAYE on primary employment is: 11.89% on income $0 $14, % on income from $14,001 $48, % on income from $48,001 $70, % on income from $70,001 $122,063 Note: income over $122,063 is taxed at 33%, as this is the maximum liable for earners' levy. Employees who qualify for the independent earners tax credit will have their PAYE reduced by $10 per week, for income between $24,000 and $44,000. This tax credit will reduce by $0.13 for each extra dollar they earn over $44,000, reaching a nil entitlement at $48,000. This tax credit is built into the PAYE tables, so no additional calculations will be required by employers. Secondary employment These tables apply to people who already have a primary source of income (eg, a regular job, a taxable pension, an income-tested benefit or a student allowance), and take on a second job. The PAYE to be deducted from secondary employment income will depend on the secondary tax code they've selected on their Tax code declaration (IR330). Tax code if annual income from all sources is likely to be SB or SB SL $0 $14,000 S or S SL $14,001 $48,000 SH or SH SL $48,001 $70,000 ST or ST SL more than $70,001 upwards Deduct PAYE at a flat rate of: cents in the dollar for the SB tax code and SB SL cents in the dollar for the S and S SL tax codes cents in the dollar for the SH and SH SL tax codes cents in the dollar for the ST and ST SL tax codes. Note For SB SL, S SL, SH SL and ST SL an additional amount of 12 cents for every dollar earned will need to be deducted for student loan repayments How to calculate employee PAYE deductions Take basic four-weekly or monthly pay. Add overtime, any regular bonus, shift allowance, value of board and lodging, and any other taxable allowance. The total is "earnings subject to PAYE". Overtime is treated as ordinary pay. Add it into the salary or wages you've paid for that pay period then deduct PAYE in the usual way. It doesn't matter if the overtime was actually worked in another pay period. Example Basic four-weekly pay of $1,588 and overtime of $ using tax code M SL. Basic four-weekly pay $1, Add overtime $ subject to PAYE (and other deductions) $1, Main source of income (M or ME) Find the amount of earnings in the correct table. If the exact amount of earnings is not shown in the table, use the nearest lower figure.* Deduct the amount of PAYE, student loan repayments and/or KiwiSaver deductions shown opposite the employee's earnings in the column headed with the employee's tax code (M SL in this case). In the above example the total earnings are $1, The nearest lower figure in the table is $1,792. Find the PAYE, student loan and KiwiSaver deductions in the columns opposite this amount.
9 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 9 Note * Calculation of PAYE in this booklet may differ slightly from the results produced by Inland Revenue's online PAYE/KiwiSaver calculator. Add any non-taxable allowances after the PAYE, student loan repayments and KiwiSaver employee contributions have been deducted. The take-home pay is: the amount of earnings subject to PAYE less PAYE less student loan repayment less KiwiSaver employee deductions plus any non-taxable allowance. Four-Weekly Pay Periods $1,764 to $1,920 1, , , , , , , , , , , , , , , Example Using figures from the example on page 8: subject to PAYE and other deductions $ 1, Less PAYE $ Less student loan $ $ Plus non-taxable meal allowance $ Take-home pay is $ Other than four-weekly or monthly pay periods These tables show you how to calculate the PAYE for regular four-weekly or monthly pay periods. Here are some notes to help you with other pay periods. Daily or casual basis See the table below for an example of daily or casual basis PAYE. For employees who work on a daily or casual basis, there are two ways to calculate how much PAYE to deduct. Either: add up the employee's earnings for each week, and use the four-weekly table to calculate the PAYE on those earnings, or work out the PAYE progressively if the employee is paid on a daily basis each week, so as weekly income increases, the PAYE you must deduct increases. Example daily or casual basis An employee works on Monday, Tuesday and Friday of the same week, earning $125 each day. The employee is paid on each day worked and is on the M tax code. for week $125 Monday Calculate PAYE on $125 using weekly table Plus $125 Tuesday = $250 Calculate PAYE on $250 using weekly table Plus $125 Friday = $375 Calculate PAYE on $375 using weekly table (A) PAYE on week's earnings to date (M code) (B) PAYE already deducted that week (A B) PAYE to deduct today from $125 Actual amount paid to employee each day Three-weekly pay periods If you pay wages three-weekly, you'll need the 2017 Weekly and fortnightly PAYE deduction tables (IR340) April 2016 version. Calculate the PAYE as follows: Divide the three-weekly wage by 3 to get the weekly income. Use the weekly tables to find the PAYE. Multiply the weekly PAYE by 3. This is the three-weekly PAYE deduction. USING THESE TABLES
10 10 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES USING THESE TABLES Half-monthly pay periods Calculate the PAYE as follows: Double the taxable earnings for the half-monthly period. Calculate PAYE on this amount using the monthly table. Divide the monthly PAYE deduction by 2. This is the PAYE to deduct for the half month. Change of pay period If you change a pay period but not the day of the week you pay wages or salaries, use the PAYE table that covers the new pay period. Example River Industries changed its pay period from four-weekly to fortnightly. The employees are still paid on a Friday. The fortnightly PAYE table is used from the first payday of the new fortnightly pay period. Changed payday If the day that the pay period ends is also changed, there will be a "broken period" between the end of the old period and the beginning of the new. Calculate the PAYE as follows: Increase the taxable earnings proportionately for the broken period to show the amount payable for the whole of the original pay period. Calculate the PAYE on the increased figure using the table for the old pay period. Reduce the PAYE proportionately to match the actual earnings for the broken period. Example A four-weekly pay period Monday to Friday (twenty working days) is changed to a fortnightly (ten working days) period. The fortnight ends on Wednesday. The broken period is from Monday to the following Wednesday which is eight days out of the old twenty-day period. An employee's taxable earnings for the eight days is $600. Increase $600 to four-weekly pay (20 8 $600) $ 1, PAYE on $1,500 (using four-weekly table) $ PAYE deduction for wages for the broken period (8 20 $208.84) $ Less than a full pay period If an employee starts working for you, finishes working for you, or loses any pay during a period, treat the earnings as if they were earned over the full pay period. Example Wood Industries Ltd has a monthly pay period. A new employee starts work halfway through the month. The PAYE for the new employee's first pay is calculated using the monthly table, in the same way as a full month's pay. No-notification rate Use this rate when an employee, receiving a salary or wage, or entity receiving schedular payments, doesn't give you a fully completed Tax code declaration (IR330). You are legally required to use the no-notification rate if they: don't enter their IRD number, or leave out any personal details, or don't enter a tax code, or don't provide a Tax code declaration (IR330). The rate you deduct is either: PAYE of cents in the dollar (which includes earners' levy) for employees, or generally 15 cents in the dollar on top of the normal rate of tax for persons or entities receiving schedular payments see page 15. How to calculate PAYE at the no- notification rate for salary and wages Take gross earnings. Add the value of taxable allowances, if any. The total is "earnings subject to PAYE". Work out PAYE, at the rate of cents in the dollar (which includes earners' levy). Use whole dollars only. Example No- notification rate Basic weekly pay $1, The tax on whole dollars is $1, cents in the dollar. PAYE to be deducted $
11 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 11 Holiday pay Include holiday pay and pay for statutory holidays as earnings in the period you actually pay them. The appropriate tax treatment of holiday pay has been clarified, effective from 1 April Holiday pay has PAYE calculated either as standard salary or wages, or as an extra pay. The standalone calculation for holiday pay cannot be used. Because of this the holiday pay online calculator is no longer available. To calculate tax on your employee s holiday pay, first confirm whether it should be calculated as an extra pay or not. If the holiday pay is included in the employee s regular pay at 8% of the employee s gross pay, or linked to the work days within the pay period (such as not working, but being paid for a public holiday or annual leave) then it is treated as salary or wages for the pay period. Holiday pay that is paid in addition to the regular pay for the pay period is treated as extra pay. These are payments that wouldn t normally be paid in that pay period, such as annual leave payments paid in a lump sum before the leave is taken, or when accumulated leave is paid out at the end of employment. Refer to the Commissioner s Operational Position on calculating PAYE on holiday pay at (search keywords: holiday pay) for more information on how to categorise holiday pay. Lump sum payments Lump sum payments from primary employment Lump sum payments include annual or special bonuses, retiring or redundancy payments, payments for accepting restrictive covenants, exit inducement payments, gratuities or back pay. These are also called "extra pays". Overtime or any regular payments are not lump sum payments. PAYE applies to lump sum payments as follows: At a flat rate of cents in the dollar when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is $14,000 or less At a flat rate of cents in the dollar when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $14,001 to $48,000. At a flat rate of cents in the dollar when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $48,001 to $70,000. At a flat rate of cents in the dollar when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is greater than $70,000, but less than the ACC earners levy maximum threshold of $122,063 (for the 2017 tax year). Amounts above this level should have PAYE applied at 33%, or when the employee asks you to use this rate. Note ACC earner levy and Residual Earner levy do not apply to retiring or redundancy payments. These should have PAYE applied at 10.5%, 17.5%, 30% or 33%, according to annualised income. If the lump sum has PAYE applied using the lowest rate (11.89%), tick the box on the Employer monthly schedule (IR348) to show this. Example You're going to pay a bonus payment of $400 to one of your employees. The employee's gross earnings for the last four weeks were $2,500. The calculation will look like this: Annualised income (13 $2,500) $ 32,500 Add the bonus payment $ 400 Total $32,900 In this example, the income level is less than $48,000, so the PAYE rate applied to the bonus payment is cents in the dollar. If the employee uses a tax code with the "SL" student loan repayment code (M SL or ME SL) you'll also have to deduct student loan repayments. Add any gross salary or wage payments for the same period to the gross lump sum amount and deduct the USING THESE TABLES
12 12 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES USING THESE TABLES pay period threshold, eg, $367 a week. The remaining amount will have the student loan deductions made at the standard deduction rate of 12 cents in the dollar. The Weekly and fortnightly PAYE deduction tables and Four-weekly and monthly PAYE deduction tables are set out so that they can be used to work out the student loan deduction amount corresponding to your employee's pay including any lump sums. Find the table entry corresponding to the pay for the pay period, and use the associated student loan deduction amount. The PAYE calculation will need to be done separately as per the above example. Lump sum payments from secondary employment A new calculation for calculating the amount of PAYE to apply to lump sum payments has been introduced. The new calculation takes into account the minimum level of income the employee expects to receive from their primary employment, based on the secondary tax code they have selected. The calculation for the amount of PAYE on an extra pay for employees using a secondary tax code is: the amount of the extra pay, plus annualised income,* plus the low threshold amount, (based on the secondary tax code used as in table one) equals the annual income estimate. *Annualised income is calculated by adding up the PAYE income payments for the four weeks ending on the date of the extra payment, whether this is the normal pay cycle or not, and multiplying by 13. The amount of the extra pay is not included in this total. Table one, low threshold amounts Tax code SB $0 S $14,001 SH $48,001 Low Threshold Amount Table two, income range and PAYE rates Annual income estimate (from the calculation above) PAYE rate (includes 1.39% ACC earners' levy) Student loan $0 $14, % + 12% $14,001 $48, % + 12% $48,001 $70, % + 12% Over $70, % + 12% If the annual income estimate is less than $122,063 then the amount of PAYE on the full extra pay should be calculated using the rate shown in table two. If the annualised income plus the low threshold amount is greater than $122,063 then none of the extra pay is liable for ACC and the PAYE rate is 33%. If the annualised income plus the low threshold amount is lower than $122,063, but the annual income estimate exceeds $122,063, then the amount of PAYE applied to the extra pay which falls below the threshold is calculated at the rate in table two, but the amount of extra pay above the threshold has PAYE applied without the ACC earner levy (i.e. at 33%). Example Jane has a second job and uses the ST tax code. Jane's secondary employer wants to pay her a one-off bonus of $20,000. In the last four weeks Jane has earned $2,857 from her second job. Applying the calculation (overleaf), Jane's employer can work out the amount of PAYE on her bonus: The annualised income ($2,857 13) $ 37,141 Plus low threshold amount (ST, tax code, table one) $ 70,001 $107,142 Plus the amount of the extra pay $ 20,000 Annual income amount $ 127,142 ST $70,001 The annualised income plus the low threshold amount is below the threshold of $122,063. But when the extra pay is added, the annual income estimate exceeds $122,063, so the ACC earner levy should only be applied to earnings below the threshold.
13 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 13 Note In this example Tax and ACC are calculated on the full bonus, and then the excess ACC is deducted. Calculation $20, % = $6,878 Annual income estimate ACC threshold = extra pay not liable for ACC $127,142 $122,063* = $5,079 $5, % = $70.59 $6,878 $70.59 = $6, Amount of PAYE applied to the extra pay = $6, Redundancy payments and retiring allowances Redundancy payments and retiring allowances are not subject to earners' levy. For primary employment the tax rate is one of the following: Primary employment 10.5 cents in the dollar. when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks is $14,000 or less 17.5 cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks is $14,001 to $48, cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks is $48,001 to $70, cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks is greater than $70,000 or when the employee asks you to use this rate. Example You're making a redundancy payment of $10, The employee's total wages for the last four weeks are $2,800. The calculation will look like this: Annual income (13 $2,800) $ 36, Add the redundancy payment $ 10, Total $ 46, In this example, the income level is greater than $14,001 but less than $48,000 so the tax rate applied to the redundancy payment is 17.5 cents in the dollar. For secondary employment the tax rate is one of the following: Secondary employment 10.5 cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks, plus the low threshold amount for their secondary tax code is $14,000 or less 17.5 cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks, plus the low threshold amount for their secondary tax code is from $14,001 to $48, cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks, plus the low threshold amount for their secondary tax code is from $48,001 to $70,000 or 33 cents in the dollar when the combined total of the payment and the grossed-up annual value of the employee's income for the previous four weeks, plus the low threshold amount for their secondary tax code is greater than $70,000 or when the employee asks you to use this rate. USING THESE TABLES *The maximum amount of earnings on which an ACC earner's levy and Earner's Account Residual levy is payable for the year ending 31 March 2017.
14 14 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES USING THESE TABLES Example You're making a redundancy payment of $10, The employee's total wages for the last four weeks are $2,800. The employee is using a SH SL tax code. The calculation will look like this: Annual income (13 $2,800) $ 36, Add the redundancy payment $ 10, Add the low threshold amount $ 48, Total $ 94, In this example, the income level is greater than $70,000, so the tax rate applied to the redundancy payment is 33 cents in the dollar. Student loan repayment on redundancy payments (tax codes M SL, ME SL, SB SL, S SL, SH SL, and ST SL) For tax codes M SL and ME SL you need to add together any gross salary or wage payments for the same period to the gross lump sum amount and deduct the pay period threshold, eg $367 a week. The remaining amount will have student loan deductions made at the standard deduction rate of 12 cents in the dollar. For tax codes SB SL, S SL, SH SL, ST SL the student loan deductions are made at 12 cents in the dollar from the first dollar of gross income. Example To calculate deduction on redundancy payment of $10, subject to student loan repayment where the employee has wages of $350 in the same period: PAYE (on whole dollars) at 17.5 cents in the dollar* $ 1, Student loan repayment ($350 + $10,200 $367 = 10,183) at 12 cents in the dollar $ 1, Total deductions $ 3, *This example assumes the gross annual value of the employee's income for the previous four weeks, plus the redundancy payment, exceeds $14,001 but is less than $48,000. Note If your employee is a KiwiSaver member, please don't make KiwiSaver deductions from their redundancy payments. Redundancy payments are exempt from KiwiSaver deductions. Casual agricultural employees and election day workers The term "casual agricultural employees" includes shedhands, shearing shedhands and casual agricultural workers. The flat rate of PAYE for casual agricultural employees and election day workers is cents in the dollar, which includes earners' levy. Calculate the PAYE as follows: Take gross earnings. Add the value of taxable allowances, if any. The total is "earnings subject to PAYE". Work out PAYE at the rate of cents in the dollar. Use whole dollars only. Example as a shedhand $ PAYE to be deducted at cents in the dollar $ Non-resident seasonal workers Non-resident seasonal workers are either recognised seasonal workers or foreign fishing workers. Recognised seasonal workers must be employed by recognised seasonal employers who are approved by the Ministry of Business, Innovation and Employment. They are generally employed in the horticulture and viticulture industries. Foreign fishing workers are workers who hold a work visa as foreign crew of a vessel fishing New Zealand waters. They are non-resident's for New Zealand tax purposes, but have to pay New Zealand tax on their New Zealand income (income paid to employee while fishing in New Zealand waters). These workers are taxed through the PAYE system using the NSW tax code and at a flat rate of cents in the dollar. The flat rate is made up of 10.5 cents PAYE and 1.39 cents earners' levy. Example (use whole dollars only) $ PAYE to be deducted at cents in the dollar $29.72 You may also have to make deductions for child support payments. However nonresident seasonal workers won't have student loan deductions or be eligible to join KiwiSaver.
15 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES 15 Rate of tax deductions from schedular payments (shortened version) For a full description see Schedual 4 of the Income Tax Act Work out tax on whole dollars only. Activity Normal tax rate Rate if no tax code declared ACC personal service rehabilitation payments (attendant care, home help, childcare, attendant care services related to training for independence and attendant care services related to transport for independence) paid under the Injury Prevention and Rehabilitation Compensation Act c 25.5c Agricultural contracts for maintenance, development, or other work on farming or agricultural land (Not to be used where CAE code applies) 15c 30c Agricultural, horticultural or viticultural contracts by any type (individual, partnership, trust or company) of contractor for work or services rendered under contract or arrangement for the supply of labour, or substantially for the supply of labour on land in connection with fruit crops, orchards, vegetables or vineyards 15c 30c Apprentice jockeys or drivers 15c 30c Cleaning office, business, institution, or other premises (except residential) or cleaning or laundering plant, vehicles, furniture etc 20c 35c Commissions to insurance agents and sub-agents and salespeople 20c 35c Company directors' (fees) 33c 48c Contracts wholly or substantially for labour only in the building industry 20c 35c Demonstrating goods or appliances 25c 40c Entertainers (New Zealand resident only) such as lecturers, presenters, participants in sporting events, and radio, television, stage and film performers 20c 35c Examiners (fees payable) 33c 48c Forestry or bush work of all kinds, or flax planting or cutting 15c 30c Freelance contributions to newspapers, journals (eg, articles, photographs, cartoons) or for radio, television or stage productions 25c 40c Gardening, grass or hedge cutting, or weed or vermin destruction (for an office, business or institution) 20c 35c Honoraria 33c 48c Modelling 20c 35c Non-resident entertainers and professional sportspeople visiting New Zealand 2 20c N/A 1 2 Activity Normal tax rate Rate if no tax code declared Payments for: caretaking or acting as a guard 15c 30c mail contracting 15c 30c milk delivery 15c 30c refuse removal, street or road cleaning 15c 30c transport of school children 15c 30c Proceeds from sales of: eels (not retail sales) 25c 40c greenstone (not retail sales) 25c 40c sphagnum moss (not retail sales) 25c 40c whitebait (not retail sales) 25c 40c wild deer, pigs or goats or parts of these animals 25c 40c Public office holders (fees) 33c 48c Sharefishing (on contract for the supply of labour only) 20c 35c Shearing or droving (Not to be used where CAE code applies). 15c 30c Television, video or film: on-set and off-set production processes (New Zealand residents only) 20c 35c If you are a non-resident contractor receiving a contract payment for a contract activity or service and none of the above activities are applicable, then: Non-resident contractor (and not a company) 15c 30c Non-resident contractor (and a company) 15c 20c Applications for exemption certificates or enquiries about non-resident contractors should be sent to: Team Leader, Non-resident Contractors Team, Large Enterprises Services, PO Box 2198, Wellington, Lower Hutt 5045, New Zealand. Phone Fax The following may be entitled to exemption from tax: non-resident entertainers taking part in a cultural programme sponsored by a government or promoted by an overseas non-profit cultural organisation non-resident sportspeople officially representing an overseas national sports body. Send applications for exemption to: Team Leader, Non-resident Entertainment Unit, Large Enterprises Services, PO Box 5542, Wellesley Street, Auckland 1141, New Zealand. Fax USING THESE TABLES
16 16 FOUR-WEEKLY AND MONTHLY PAYE DEDUCTION TABLES Four-Weekly Pay Periods $4 to $160 FOUR-WEEKLY
All legislative references in this interpretation statement are to the Income Tax Act 2007 ( ITA 2007 ) unless otherwise stated.
Interpretation Statement IS 10/04 NON-RESIDENT CONTRACTOR SCHEDULAR PAYMENTS This interpretation statement replaces Non-Resident Contractor s Withholding Tax Who is Affected by the Withholding Tax Rules,