Employer's guide Information to help you with your responsibilities as an employer

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IR 335
                                    January 2008

Employer’s guide
Information to help you with your
responsibilities as an employer
www.ird.govt.nz                                                                                         1

Introduction                                           How to use this
If you have anyone working for you, it’s your
                                                       guide
responsibility to make deductions from payments
you make to them, as well as giving information        Part 1 – Your responsibilities as
to us. We explain what you’re required to do,                   an employer
and what happens if you don’t comply.
                                                       Part 1 deals with employers’ day-to-day
If you haven’t yet registered as an employer,          responsibilities. It explains who is an employee,
read our First-time employer’s guide (IR 333).         and the types of deductions you may have to
You can get this from www.ird.govt.nz or by            make from your employees’ wages.
calling INFOexpress—see page 55. It tells you
what you need to know before you register as an        Part 2 – Record keeping and
employer.                                              making payments
If you need help with any of your employer             This part tells you what records you need to
responsibilities, or you have questions about          keep, how often to pay deductions to us, and
anything in this guide, please call us on              what forms you need to complete when you pay
0800 377 772.                                          the deductions. It also tells you what to do if
                                                       you stop being an employer.
Work permits
If you’re thinking of hiring someone from              Part 3 – Other payments
overseas, they need a work permit.
                                                       Employers may make payments to their workers
Only citizens and permanent residents of               other than normal wages. This part explains the
New Zealand and Australia may work in                  tax treatment of these other types of payments.
New Zealand without a work permit—everyone
else needs one. You can be fined for knowingly         Part 4 – Penalties
employing overseas workers without valid work          This part tells you about the penalties and charges
permits.                                               if you fail to meet your tax responsibilities.
For more information on work permit
requirements please call the New Zealand               Part 5 – Special types of workers
Immigration Service on 0508 558 855 or go to           Part 5 explains how to deduct tax from the
www.immigration.govt.nz                                payments you make to special types of workers.

                                                       Part 6 – Services you may need
                                                       Our services, contact telephone numbers and a
                                                       list of useful publications.

The information in this guide is based on current tax laws at the time of printing.
2                                                    EMPLOYER’S GUIDE

www.ird.govt.nz
Visit our website for services and information.
Go to:
• Get it done online to file returns, register for
  services and access account information.
• Work it out to calculate tax, entitlements,
  repayments and due dates and to convert
  overseas income to New Zealand currency.

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 booklet by going to
www.ird.govt.nz and selecting “Forms and
guides” or you can order copies by calling
INFOexpress—see page 55.
www.ird.govt.nz                                                                                    3

Contents
Part 1 – Your responsibilities                      Part 3 – Other payments
         as an employer                             Allowances                                    33
Who is an employee?                            5    Lump sums (extra emoluments)                  35
Types of deductions                            6    Regular bonuses                               38
Deducting PAYE                                 6    Holiday pay                                   39
Tax codes                                      6    Loss of earnings compensation                 39
No-declaration rate                            7    Honoraria                                     39
If an employee has a Special tax code               Payments to school trustees                   40
    or deduction rate (IR 23) certificate       8   Life insurance and personal accident
Withholding payments                           10       premiums                                  40
If a worker has a Certificate of                    Prize money paid at sporting events
    exemption (IR 331)                         11       and competitions                          40
ACC earners’ levy                              11
KiwiSaver                                      12   Part 4 – Penalties
Student loan deductions                        12
                                                    Late payment penalties                        43
Child support deductions                       12
                                                    Interest                                      43
Deducting employees’ arrears                   14
                                                    Late filing penalty                           43
Superannuation fund contributions              15
                                                    Non-electronic filing penalty                 44
Withdrawal tax                                 17
                                                    Shortfall penalties                           44
                                                    Failing to make deductions                    44
Part 2 – Record keeping and                         Failing to pay deductions to Inland Revenue   44
         making payments                            Evasion                                       45
Records you need to keep                       19   Additional student loan penalties             45
PAYE intermediaries                            19   Additional child support penalties            45
Manual record keeping                          20   Employee start and finish information
Paying deductions to Inland Revenue            21       penalties                                 45
Are you a small employer?                      21   Audit procedures                              46
Are you a large employer?                      21   If you disagree                               46
Large employers with other pay periods         22
Employer deductions forms (IR 345 and               Part 5 – Special types of
    IR 346)                                    23
Completing the IR 345                          23
                                                             workers
Completing the IR 346                          23   Casual agricultural workers                   47
Employer monthly schedule (IR 348)             25   Commission agents                             47
Child support codes                            28   Directors                                     47
Correcting your IR 348 after it’s been filed   29   Drovers and musterers                         47
Electronic filing (ir-File)                    31   Election day workers                          48
How to pay your deductions                     31   Fishers                                       48
When an employee stops working for you         32   IR 56 taxpayers                               48
If you’ve ceased or are about to cease              Jockeys and trotting drivers                  48
    providing fringe benefits                  32   Musicians, dance bands and orchestras         48
If you stop paying wages permanently           32   Non-residents                                 49
If you have ceased or are about to cease            Partners in a partnership                     50
    business                                   32   Piece-workers and outworkers                  51
Running totals                                 32
4                                                EMPLOYER’S GUIDE

Screen production industry                  51
Shareholder-employees in close companies    51
Shearers, shedhands and shearing            51
   contractors
Spouses or partners                         52
Students                                    53
Subsidised workers                          53
Workers engaged in “activity in the
   community” projects                      54
Workers under labour-only contracts
   in the building industry                 54

Part 6 – Services you may
         need
How to contact us                           55
INFOexpress                                 55
Call recording                              56
Business Tax Information Service
    and Maori Community Officers            56
Child support services                      56
Payroll News                                56
Tax Information Bulletin (TIB)              56
Privacy                                     56
If you have a complaint about our service   57
Publications                                58

Index                                       59
www.ird.govt.nz                                                                                       5

                                                                                                           Responsibilities
Part 1 – Your responsibilities as an employer
In this part, we explain the tax codes and        Who is an employee?
various types of deductions you’ll need to make
                                                  It’s very important you’re sure about whether the
from your employee’s pay. You must pay these
                                                  people who work for you are your employees, or
deductions to us by the due dates.
                                                  whether they’re self-employed. This is because
The PAYE deduction amounts, used in the           tax, KiwiSaver, student loan and accident
examples in this guide, are from the 2008 PAYE    compensation laws treat the two groups of
deduction tables. They are based on pay periods   people differently. You’re responsible for your
ending on or after 1 April 2007.                  employees’ tax deductions.

                                                  It’s illegal to treat a true employee as self-employed
                                                  to avoid deducting tax. If you do this you may
                                                  be prosecuted and fined, and still have to pay the
                                                  amount of PAYE that you should have deducted.

                                                  In most cases it will be quite clear whether or
                                                  not someone is an employee. Generally, if you
                                                  control how and when the person’s work is
                                                  done, the person is your employee.

                                                  If you answer “yes” to all or most of the
                                                  following questions, the worker is probably
                                                  your employee.
                                                  ●    Does the person have to do the work, rather
                                                       than being able to hire someone to help?
                                                  ●    Can you tell the worker what to do on the
                                                       job, and when and how to do it?
                                                  ●    Do you pay the worker at a set rate
                                                       (eg hourly, weekly, monthly, or by unit of
                                                       production)? A person paid by commission
                                                       or on a piece-work basis may still be an
                                                       employee, especially if there are other
                                                       employees who work on the same basis.
                                                  ●    Can the worker get overtime or penal rates?
                                                  ●    Does the person work set hours, or a given
                                                       number of hours, each week or month?
                                                  ●    Does the person work at your premises, or at
                                                       a place you specify?
                                                  ●    Do you set the standards for the amount and
                                                       quality of the person’s work?

                                                        Note
                                                      A person can be self-employed in one line of
                                                      work and still work for someone else as an
                                                      employee.
6                                                                                   EMPLOYER’S GUIDE
Responsibilities

                   For more help                                        Tax codes
                   If you need more help to decide whether your         Tax code declaration
                   worker is an employee, see our leaflet
                                                                        All new employees must complete a Tax code
                   Self-employed or an employee? (IR 336). You
                                                                        declaration (IR 330) when they start working for
                   might like to go through it with any of your staff
                                                                        you. If they want to change their tax code, they
                   whose status is unclear.
                                                                        must complete a new tax code declaration.
                   If you’re still not sure, call us on 0800 377 772.
                                                                        It’s not necessary for your employees to complete
                   If you decide someone is not an employee, you        a new declaration every year, providing their tax
                   may still have to deduct withholding tax from        code remains the same. Each employee needs to
                   any payments you make to them (see page 10).         read the notes on the IR 330 to work out their
                                                                        correct tax code.
                   Types of deductions
                                                                        You must keep the tax code declarations for
                   PAYE (pay as you earn) is the basic deduction
                                                                        seven years after the last wages payment is made
                   you take out of your employees’ wages whenever
                                                                        to the employee.
                   you pay them. PAYE includes an ACC earners’
                   levy (see page 11). Besides PAYE, there are          If you need extra forms, you can print them from
                   other deductions you may have to make from           www.ird.govt.nz, photocopy them or order them
                   your employees’ pay—these include student            through INFOexpress—see page 55.
                   loan repayments, child support and KiwiSaver
                                                                        Primary employment
                   deductions.
                                                                        Most employees have one main job which is
                   Deducting PAYE                                       their main or only source of income. This job
                   Each year we send you the PAYE deduction             is primary employment. A taxable pension,
                   tables containing the current deduction rates        benefit or student allowance can be primary
                   so you know how much to deduct from each             employment if it’s the main or only source of
                   employee’s pay.                                      income.

                   You can use the PAYE calculator at                   An employee can use only one primary tax code
                   www.ird.govt.nz to calculate tax deductions          for their main source of income at any time, ie,
                   from an employee’s gross wages. You can              M or ML. Employees who are repaying their
                   also work out how much PAYE you’ll have              student loan should use the M SL tax code—see
                   to account for, if you’ve paid the employee a        page 12. The IR 330 explains how to select a
                   net amount. There’s a separate holiday pay           tax code.
                   calculator to work out tax deductions on holiday     Once you have the employee’s tax code, use the
                   pay.                                                 PAYE deduction tables to work out how much
                                                                        PAYE to deduct from each pay.
www.ird.govt.nz                                                                                           7

                                                                                                              Responsibilities
Secondary employment                                    Example
If an employee is already using a primary tax           Amy works in the spraypainting division of
code (M, ML or M SL for their main source of            Cars & Cars Ltd between 8 am and 5 pm,
income from a job or a benefit) and decides to          Monday to Friday, and is paid fortnightly. She
take another job, that other job is secondary           also works between 6 pm and 10 pm, Tuesdays
employment.                                             and Thursdays, in the glass division of Cars
The employee must complete another IR 330               & Cars Ltd, and is paid monthly. Amy has
for secondary employment, using one of the              completed two IR 330s — the one for the spray
secondary tax codes: S, SH or ST. Employees             painting division shows the tax code “M”,
repaying student loans must use the S SL, SH SL         while the one for the glass division shows the
or ST SL code if they are already using the M SL        tax code “S”.
code for another job.
                                                       No-declaration rate
See the PAYE deduction tables for the current          Use this rate when an employee or person
secondary tax rates. Employees can choose to           receiving a salary, wages or withholding
have their secondary income taxed at a higher          payments does not give you a fully completed
rate than would be deducted if they used the           IR 330 declaration form. You are legally
S (secondary) code by using either the SH              required to use the no-declaration rate where
(secondary high) or ST (secondary top) codes on        the employee or person has failed to give you
their IR 330 tax code declaration.                     a completed IR 330. A completed IR 330
Using the correct secondary tax code will reduce       declaration must include their:
the likelihood of a tax bill at the end of the year.   ●   name
                                                       ●   IRD number
Unlike the primary tax codes, an employee              ●   tax code.
can use the secondary tax codes on more than
one IR 330 at the same time.                           The rate you deduct is either:
                                                       ●  PAYE of 46.3 cents in the dollar (which
 Example                                                  includes earners’ levy) for employees, or
 Belinda has one full-time job and three               ●  15 cents in the dollar on top of the normal
 part-time jobs. She uses a primary tax code              rate of withholding tax for persons receiving
 for her full-time job and the S tax code for her         withholding payments.
 three part-time jobs.
                                                       For more information on withholding payments
                                                       see page 10.
If an employee works for you using a primary
tax code and also does different work for you          If an employee doesn’t fill in an IR 330 form or
outside normal working hours, you would                complete it fully, enter “ND” as the tax code on
generally add the payment for the unrelated            your Employer monthly schedule (IR 348), and
work to the normal pay and calculate PAYE on           tax their pay at the no-declaration rate.
the total payment.
                                                       This is how to calculate PAYE at the
However, where the unrelated work covers a             no-declaration rate for salaries and wages.
different period from the normal pay period, or        1. Take gross earnings.
separate wage records are kept (eg, the work is        2. Add the value of taxable allowances, if any.
undertaken in a different department), use the         3. The total is “earnings subject to PAYE”.
secondary tax code. The employee must fill in a        4. Work out PAYE at the rate of 46.3 cents in
separate IR 330 if the secondary code is used.            the dollar. Use whole dollars only.

                                                        Example
                                                        Basic weekly pay is $385.75. The tax on whole
                                                        dollars is $385 x 0.463
                                                        PAYE to be deducted is $178.25
8                                                                                                                                     EMPLOYER’S GUIDE
Responsibilities

                   If an employee has a Special tax code or deduction rate (IR 23) certificate
                   Some employees or other workers may have                                 People who receive wages or withholding
                   circumstances which mean you may have to                                 payments may apply to us for an IR 23
                   deduct tax at a special rate, or not deduct tax at                       certificate which authorises you to:
                   all. They’ll have a certificate that tells you the                       ●      make PAYE deductions using a specified code
                   rate of deductions to make. If you don’t see a                           ●      deduct tax at a certain rate
                   certificate, you must deduct the normal rate of                          ●      deduct earners’ levy only, or
                   tax and other deductions.                                                ●      deduct student loan repayments at a specified
                                                                                                   rate.
                       Note
                       If the IR 23 authorises you to deduct earners’
                       levy only (no PAYE deduction) the earners’
                       levy amount should be shown in the
                       “PAYE/withholding tax” column of your
                       employer monthly schedule.

                                                                                                                                                                         IR 23

                                                                                                                                                            E
                                                                                                                                                              xa
                                                                                                                                                                        February 2002

                                                                                                                                                                 m
                                                                                                                                            No. 5     32475

                                                                                                                                                                    pl
                   Quote this number if you need

                                                                                                                                                                        e
                   to discuss this certificate with us

                                                                                                                                                                           O
                                                         Special tax code or deduction rate

                                                                                                                                                                             n
                                                                                                                                                                                ly
                   IRD number                            IRD number                   0 1 5 9 1 1 8 6
                                                         Work and Income
                                                         NZ number                                                                                 Date of issue    1 9 M a r c h 2 007

                   Name and address of holder            Employee’s name               Matt Finnish
                                                         Employee’s address            15 Kakapo Cres
                                                                                       GREYMOUTH
                   Expiry date of certificate            Valid from                    0 1 0 4 2 0 0 7                            to           3 1 0 3 2 0 0 8
                                                                                        Day      Month          Year                            Day      Month           Year

                   Name of employer. If more
                   than one employer, wording            To:
                                                                                       Paula Royd Photographer
                   is “to whom it may concern”
                                                         You are authorised to make the following deductions from the earnings of the above employee:

                                                                                              PAYE deductions under tax code
                   Deduct at the rate indicated
                   with a “X”                                                                 PAYE deductions at the rate of             23           cents in each dollar
                                                                                              of gross income
                                                                                              withholding tax deductions at the rate of                           cents in each
                                                                                              dollar of gross withholding income

                                                                                              earner levy deductions—multiply gross income by                           0.013

                                                                                              Student loan deductions at the rate of                          cents in each
                                                                                              dollar of gross income.

                                                               Please keep this certificate with your employee’s wage records.
                                                               At expiry date, your employee must give you either a new certificate or a Tax code
                                                               declaration (IR 330) to use after that date.
                                                         This certificate is issued under the Income T
                                                                                                     ax Act 1994, the Income Tax (Withholding Payments) Regulations 1979, the Accident
                                                         Rehabilitation and Compensation Insurance Act 1992, the Accident Insurance Act 1998, and the Student Loan Scheme Act 1992.

                                                                                                                  Signature
                   The certificate is invalid unless
                   it’s signed
                                                         Area Manager /Centre Manager                                                                       19 3 2007
                                                                                                                                                                 Date

                   Must be signed by the holder                                                                   Employee’s signature
                                                          Please sign this panel before handing
                                                          this form to your employer. It is an                                                            26 3 2 007
                                                          offence to alter this certificate.                                                                     Date
www.ird.govt.nz                                                                                               9

                                                                                                                  Responsibilities
Checking the IR 23                                       If a student loan deduction rate is shown on the
When an employee gives you an IR 23, make                IR 23, use this rate to calculate the student loan
sure it’s valid. Check that:                             deduction.
●     the person named on the certificate is the         As they have a special deduction rate for their
      person working for you and the IRD number          student loan, you don’t need to use the student
      is the same as their IR 330                        loan deduction column in the PAYE tables.
●     it’s signed by an Inland Revenue manager           Deduct PAYE using the M, S, SH or ST rates
●     it’s for the current tax year                      shown in the tax tables, then add the student
●     it shows the deduction rate                        loan deduction calculated.
●     the employee has signed it
●     the certificate shows the period it applies for.    Example
When that period ends, the employee must show             An employee’s IR 23 shows the following:
you a new IR 23 or complete a new IR 330 and
                                                          PAYE deductions under tax code M SL
select the appropriate code for their changed
circumstances. If you don’t have either of these,         Student loan deductions at the rate of 15 cents
deduct tax at the no-declaration rate—see                 in each dollar of gross income
page 7.
                                                          Fortnightly gross earnings are $1,000.
Making deductions
                                                          Student loan to be deducted is $150
Calculate the tax by multiplying the employee’s
                                                          ($1,000 x .15).
gross pay by PAYE at the special rate shown.
                                                          PAYE deducted (using the tax tables) $201.06
    Example
    An employee’s IR 23 shows the following:

    PAYE deductions at the rate of 23 cents in each
    dollar of gross income.

    Earners’ levy deductions—multiply gross
    income by 0.013

    Gross earnings for pay period are $1,000.

    Rate to deduct from employee’s wages is
    23 + 1.3 = 24.3 cents.

    PAYE to be deducted is $243.
    ($1,000 x .243 cents).
10                                                                                      EMPLOYER’S GUIDE
Responsibilities

                   What tax code goes on the Employer                   Don’t deduct tax from withholding payments
                   monthly schedule (IR 348)?                           made:
                   ●    If the IR 23 shows a special rate for PAYE      ● to a company (except a company that is
                        deductions, show “STC” in the tax code box        a non-resident contractor or non-resident
                        on your Employer monthly schedule (IR 348).       entertainer or involved in agriculture,
                   ●    If the IR 23 shows a special deduction rate       horticulture or viticulture)
                        for student loans, use the tax code shown on    ●     to a non-resident contractor who is eligible
                        the IR 23 on your IR 348. This code should            for total relief from tax through a double tax
                        be M SL, S SL, SH SL or ST SL.                        agreement, and is present in New Zealand
                   ●    If the IR 23 shows a special rate for PAYE            for a total of 92 days or less in any 12-month
                        deductions and student loans, show “STC”              period
                        in the tax code box on your IR 348.             ●     to or for the contract activities of a non-
                   ●    If the IR 23 shows a special rate for                 resident contractor who has been paid
                        withholding tax deductions, show “WT” on              $15,000 or less in total from all payers in any
                        your IR 348.                                          12-month period
                                                                        ●     for work or services completed by a public,
                   Withholding payments                                       local or Mäori authority
                   Withholding payments are payments made to            ●     to a holder of a current certificate of
                   people who are not employees but who are                   exemption.
                   employed on a contract-for-service basis—see
                   page 5 for information to help you work out          A worker who is GST-registered will charge GST
                   who is an employee. These activities are taxed       on goods and services supplied. This means the
                   at a flat rate of withholding tax.                   worker’s gross earnings will increase by the GST
                                                                        charged.
                   The main activities and the tax rate for each are
                   listed on the back of the IR 330. If you’re paying   If the worker gives you a tax invoice, work out
                   someone to do one of the types of work listed you    and deduct withholding tax on the amount,
                   must deduct withholding tax from the payments.       excluding GST.

                   Withholding tax is deducted even if the worker is
                                                                            Example
                   registered for GST. The only exception is if they
                   provide you with a Certificate of exemption              You receive a tax invoice showing:
                   (IR 331)—see page 11.                                    Cost                      $500.00
                   Some types of withholding payments—such as               plus GST                  $ 62.50
                   commissions, directors’ fees and payments to             GST-inclusive amount      $562.50
                   non-resident contractors—are covered in more
                   detail in Part 5.                                        less withholding tax
                                                                            (20% of $500)             $100.00
                   If the type of work you’ve hired your contractor
                   to do isn’t listed on the back of the IR 330 you         Net payment               $462.50
                   don’t need to ask them to complete an IR 330             You would deduct withholding tax from the
                   or deduct withholding tax from payments you              $500 and show the $500 as the gross payment
                   make to them.                                            on the Employer monthly schedule (IR 348).
                       Note                                                 Show a WT tax code when completing the
                                                                            IR 348 for a withholding payment recipient.
                       Don’t deduct earners’ levy, KiwiSaver
                       deductions or student loan repayments
                       from withholding payments. In these
                       circumstances this is the worker’s
                       responsibility, not yours.
www.ird.govt.nz                                                                                           11

                                                                                                               Responsibilities
If a worker has a Certificate of                        ACC earners’ levy
                                                        All employees must pay an ACC earners’ levy
exemption (IR 331)                                      to cover the cost of non–work-related injuries.
People who are in business for themselves, and          We collect this on behalf of the Accident
who are subject to withholding tax, can apply to        Compensation Corporation (ACC).
us for a certificate of exemption.
                                                        For employees, this levy has been built into the
A certificate of exemption may also be held by          PAYE deduction tables and is deducted along
a non-resident contractor undertaking contract          with the tax. This means you don’t need to do
activity in New Zealand. See page 49 for further        any extra calculations for it in each pay period.
information.
                                                        Almost all earnings subject to PAYE are liable for
If a worker has a certificate of exemption,             the levy. They include:
you can make payments without deducting
                                                        ●   wages and salaries
withholding tax. It cannot be used to exempt
                                                        ●   overtime pay
an employee’s salary or wages from PAYE
                                                        ●   backpay and holiday pay
deductions.
                                                        ●   long-service leave pay
Checking the IR 331                                     ●   bonuses or gratuities
When you are shown a certificate of exemption,          ●   taxable allowances
you must check that it is valid and current.            ●   shareholder-employee salaries that has PAYE
                                                            deducted
If the certificate is valid, don’t deduct withholding   ●   salaries to partners in a partnership.
tax from payments you make to them.
                                                        The main exceptions are withholding payments,
If the certificate is not valid or current, the         retirement payments, redundancy payments, jury
worker must complete an IR 330 tax code                 fees, witness fees, taxable and non-taxable
declaration. You must deduct withholding tax            pensions, and tax-free allowances.
from payments you make.
                                                        ACC will invoice close company employers
You don’t need to include tax-exempt payments           for earners’ levy on shareholder-employee
on your Employer monthly schedule (IR 348).             remuneration that doesn’t have PAYE deducted.
However, you must keep a record of these                The levy will be based on the shareholder-
payments.                                               employee remuneration declared in the
It’s a good idea to keep a record of the certificate    company’s IR 4 income tax return.
number, in case we review your records. This
number is on the bottom right-hand corner of
the certificate.
12                                                                                  EMPLOYER’S GUIDE
Responsibilities

                   KiwiSaver                                          the amount of PAYE and student loan deductions
                                                                      to be made.
                   You must make KiwiSaver available to
                   all employees (unless you’ve received an           Employers then have to deduct the loan
                   exemption).                                        repayments from their wages and pay the
                                                                      deductions to us with the PAYE deductions.
                   As an employer you’re required to:
                   ●    check whether new employees are eligible to   If they tell you part-way through the year that
                        join KiwiSaver                                they should have been using one of the student
                   ●    check whether new employees should be         loan codes, deduct the repayments only from
                        automatically enrolled                        the time you get the new code. It’s not your
                   ●    give the KiwiSaver employee information       responsibility to deduct repayments if they
                        pack (KS 3) to:                               haven’t given you the correct code.
                        – new employees who qualify for automatic
                                                                      You’ll need to keep records of PAYE and student
                            enrolment, and
                                                                      loan repayments separately.
                        – existing employees who want to opt in
                   ●    provide information to us about:              By law, you cannot discriminate in any way
                        – all new employees who qualify for           against any employee because of their student
                            automatic enrolment, and                  loan responsibilities—see page 45 for more
                        – eligible employees who want to opt in to    details.
                            KiwiSaver
                   ●    provide new employees with a written            Note
                        statement if you have an employer-chosen
                                                                        Don’t deduct student loan repayments from
                        scheme, and also that scheme’s investment
                                                                        withholding payments (see page 10).
                        statement

                       Note
                       For more information please read our
                                                                      Child support deductions
                       KiwiSaver employer guide (KS 4) available at   Inland Revenue Child Support assesses and
                       www.ird.govt.nz or from INFOexpress.           collects child support from parents who don’t
                                                                      live with their children.

                                                                      The payments we collect are paid directly to the
                   Student loan deductions                            parent who has care of the child, if that parent
                   Students taking out loans under the student loan   is not a beneficiary. If they are a beneficiary, the
                   scheme only have to make repayments if they        payments are passed on to the government.
                   earn over a certain amount, called the repayment   Employees can choose how they want to
                   threshold.                                         pay their child support. It may be a private
                   When they expect to earn over the repayment        arrangement that doesn’t involve the employer.
                   threshold from primary employment, they must       However, if we ask you to deduct child support
                   tell their employers to start deducting loan       from any employee’s wages, you’re required to
                   repayments.                                        do this by law.

                   They do this by selecting an M SL tax code for     We work out how much child support a paying
                   primary employment, or an S SL, SH SL or           parent should pay from each pay. If the parent
                   ST SL tax code for secondary employment, on        is your employee, we may contact you for some
                   their IR 330.                                      information. This will usually be details about
                                                                      how often you pay wages, the next regular
                   The PAYE deduction tables have columns for the     payday or pay period for that employee, and
                   M SL, S SL, SH SL and ST SL codes, which show      whether you want an employee reference on the
                                                                      notice we send you.
www.ird.govt.nz                                                                                     13

                                                                                                         Responsibilities
Child support deduction notice                      Where possible, all child support notices issued
Once we have all the information, we’ll send        for the same pay will be in one envelope. We
you a child support deduction notice. This tells    will issue an individual notice for each employee
you to deduct child support payments from your      you make deductions for. However, you may
employee’s pay.                                     wish to receive notices in one of the following:
                                                    ●   a consolidated deduction notice—a notice
The notice shows:
                                                        in schedule form showing all additions
●   your employee’s name and IRD number                 and changes to child support payments for
●   the payday or pay period when you must              multiple employees, or
    start deducting child support                   ●   both individual deduction notices and a
●   the amount to deduct from each pay                  consolidated deduction notice.
●   employee reference, if provided.                Please call us on our freephone number for
Don’t make any deductions before the start date     child support employers if you would like to
on the notice.                                      use either of the above options. You can call
                                                    0800 220 222 between 8 am and 5 pm Monday
If a payday is specified on the notice and it’s     to Friday.
different to your actual payday you need to
contact us so we can change our records.
Similarly, if a pay period is specified that is
different to your actual pay period please
contact us.

It’s important the deductions shown on your
Employer monthly schedule (IR 348) match the
amount we expect to receive from the employee.
If the payday or pay period on the notice is
incorrect, these amounts may not match and
your employee may be charged unnecessary late
payment penalties.

If the deductible amount changes during the year,
we’ll send you another child support deduction
notice. This will show the new amount of child
support and when you must start deducting it.

Child support has priority over any other
deductions from an employee’s net pay. This
means that after you have deducted PAYE, you
must deduct child support before you deduct
anything else (such as student loan repayments,
insurances, KiwiSaver and other superannuation
deductions, or union fees).

We might ask you to deduct child support
from payments to someone who is not your
employee—eg, a contractor or a commission
agent. The notice we send you explains how to
make and pay the deductions.
14                                                                                 EMPLOYER’S GUIDE
Responsibilities

                   Protected net earnings                              Paying child support deductions
                   All employees must be allowed to keep 60% of        Child support deducted in one month is due by
                   their net (after tax) pay, after child support is   the 20th of the following month.
                   deducted. This is the employee’s “protected net
                                                                       Show the total child support deducted for the
                   earnings”, to cover their living expenses.
                                                                       period on the Employer deductions (IR 345)
                   Protected net earnings applies to child support     or (IR 346) form. You also need to show the
                   only. So you must still deduct other deductions     amount deducted on the Employer monthly
                   such as student loan repayments, KiwiSaver          schedule (IR 348). See pages 23 to 28 for
                   deductions, insurances, superannuation and          instructions on completing these forms. You
                   union fees from the protected net earnings.         must keep records of child support deducted
                                                                       along with your normal wage records.
                   Protected earnings are usually only affected if
                   your employee receives less pay than usual for      Large employers have the option of paying child
                   some reason. If you’re asked to deduct more         support once a month on the 20th or twice
                   than 40% of your employee’s net pay, you must       monthly on the 5th and the 20th along with
                   not deduct the full amount of child support.        other tax deductions.
                   If you don’t deduct the full amount of child
                                                                       It’s important that the IR 348 shows all
                   support, don’t make up the difference from
                                                                       deductions made in the month, no matter
                   future pays. We’ll make arrangements with the
                                                                       whether you pay it to us monthly or twice-
                   employee to pay the balance owing.
                                                                       monthly.

                    Example 1 – Full wages paid                        Employee privacy and prejudice
                    John is liable for payments of $70 child           The law requires you to protect the privacy of
                    support each week.                                 your employees who pay child support. You
                    John’s weekly wage                $ 420.00         can’t give out information about their child
                    PAYE deductions                   $ 82.27          support responsibilities (with two exceptions—
                                                                       page 45).
                    Net pay                           $ 337.73
                    40% of $337.73 is                 $ 135.09         By law, you cannot discriminate in any way
                                                                       against any employee because of their child
                    Because $70 is less than 40% of John’s net         support obligations. It’s very important that you
                    pay ($135.09) the full amount of child             read the full statements about privacy, prejudice
                    support can be deducted.                           and penalties on page 45.
                    Example 2 – Less than full wages
                                                                       Deducting employees’ arrears
                    John has had three days leave without pay
                                                                       Sometimes, we’re unsuccessful in our attempts to
                    in a week.
                                                                       obtain payment from your employee(s) and may
                    John’s reduced wage               $ 168.00         need your assistance. We may send you a notice
                    PAYE deductions                   $ 27.21          requiring you to deduct tax or student loan
                    Net pay                           $ 140.79         arrears from an employee’s wages. You must
                    40% of $140.79 is                 $ 56.32          deduct any child support payments before tax
                                                                       or student loan arrears. Pay the arrears to us by
                    Because $70 is more than 40% of John’s net         the end of each calendar month, separately from
                    pay ($56.32) the full amount of child support      PAYE deductions.
                    cannot be deducted, otherwise John would be
                    left with less than 60% of his net pay. Any        Don’t use an Employer deductions (IR 345) or
                    other deductions, eg student loan deductions       (IR 346) to pay the arrears. Instead, attach a
                    would still have to be taken out of John’s         copy of the deduction notice with your payment.
                    remaining pay.
www.ird.govt.nz                                                                                          15

                                                                                                              Responsibilities
                                                      For more help
Superannuation fund                                   To check whether your fund is liable for SSCWT,
contributions                                         contact your fund manager.
A superannuation fund is a scheme that
                                                      Specified superannuation contribution
has been registered under the Superannuation
                                                      withholding tax
Schemes Act 1989.
                                                      An employer is required to make a deduction
A specified superannuation contribution is            of specified superannuation contribution
any contribution to a superannuation fund an          withholding tax (SSCWT) when making any
employer makes for the employees’ benefit.            specified superannuation contribution. If an
If your employees ask you to make deductions          employer fails to make a deduction as required,
from their wages and pay them to a                    the SSCWT is worked out on the grossed-up
superannuation scheme, these are not specified        amount of the specified superannuation
superannuation contributions.                         contribution. To calculate the withholding tax,
                                                      use the formula:
    Note                                                                a
                                                          SSCWT =            x b
    Employer contributions to KiwiSaver are                            1–a
    exempt from specified superannuation
                                                      Where: a is the rate of SSCWT, and
    contribution withholding tax (SSCWT), up
                                                             b is the actual amount paid to the fund.
    to a maximum of 4% of the employee’s gross
    salary or wages. Employer contributions to        The grossed-up contribution is then:
    other complying superannuation funds are          ●     the actual amount paid to the fund, plus
    also exempt from SSCWT.
                                                      ●     the amount of SSCWT worked out using the
                                                            formula.
If your superannuation fund is not a KiwiSaver
scheme or a complying superannuation fund,
any contribution an employer makes to a                   Example
superannuation fund for the benefit of an                 An employer made a contribution of $1,000
employee is liable for SSCWT.                             to a superannuation fund. The amount of
                                                          SSCWT to be paid is (using the formula):
The contribution is:
●    taxed at the withholding rate of 33 cents in           SSCWT = 0.33 x $1,000 = $492.53
     the dollar (SSCWT), or                                         0.67
●    taxed at the optional SSCWT rate of                  The gross superannuation contribution is:
     39 cents in the dollar (see page 16) if the
                                                          The amount received by the
     employee and the employer agree, or
                                                          superannuation fund            $1,000.00
●    taxed at an SSCWT rate based on the annual
                                                          Plus the withholding tax on
     salary or wages paid to the employee in
                                                          that amount                    $ 492.53
     the previous standard tax year, 1 April
     to 31 March. When employees have not                 Grossed-up contribution        $1,492.53
     worked for the previous year, an annualised
                                                          Withholding tax on $1,492.53 at 33 cents
     estimate based on the salary or wages they
                                                          in the dollar is $492.53. This is the tax on
     have received or will receive, can be used.
                                                          the grossed-up contribution. The SSCWT is
     This option is voluntary and at the discretion
                                                          deducted from the grossed-up contribution.
     of the employer (see page 16) or,
●    treated as salary or wages of the employee
                                                          Note
     and taxed at the employee’s personal tax
     rate, if the employer and the employee agree         The above formula and example assumes that
     (see page 16).                                       no amount of SSCWT has already been paid
                                                          for the contribution.
16                                                                                 EMPLOYER’S GUIDE
Responsibilities

                   Optional SSCWT rate – 39 cents in the               Where the employee didn’t work for the
                   dollar                                              employer for all of the previous standard tax
                   Employees can choose (with the approval of          year, the employer can estimate the amount
                   their employer) to have SSCWT deducted at the       of salary or wages that will be earned by the
                   higher rate of 39%. Only employees who earn         employee in the year ahead, and base the
                   over $60,000 a year are likely to request the       SSCWT rate on the estimate.
                   higher rate to avoid withdrawal tax (see page 17    Paying SSCWT
                   for details).
                                                                       Pay any SSCWT deducted with your PAYE
                   SSCWT rate based on employee salary or              deductions by the due date.
                   wages
                                                                       You must let us know if you’re paying SSCWT,
                   Employers can offer their employees an SSCWT        so we can send you an Employer deductions
                   rate based on the employee’s salary or wages        (IR 346) form to return with your payments
                   received in the previous standard tax year, ie      (see page 23). Enter the amount of SSCWT
                   1 April to 31 March. This option is beneficial to   deducted for the period in Box 8 on the IR 346.
                   employees who earn less than $38,000.               If you need one, contact us—see page 55.
                   The employer must determine the rate at the         Taxing contributions at the employee’s
                   beginning of the standard tax year the specified    personal tax rate
                   superannuation contributions relate to. Where
                                                                       If employers agree, employees can choose to
                   the employee’s salary or wages in the previous
                                                                       have all or part of the value of the employer
                   standard tax year was:
                                                                       superannuation contribution included in their
                   ●     under $11,400, their SSCWT rate would be      gross salary and wages and taxed at their
                         15 cents in the dollar                        personal tax rates. This will benefit employees
                   ●     more than $11,400 and not more than           whose tax rate is less than 33%. Employees
                         $45,600, their SSCWT rate would be            must understand that classifying this amount as
                         21 cents in the dollar                        salary and wages will affect their Working for
                   ●     more than $45,600, their SSCWT rate would     Families Tax Credits entitlement, the amount
                         be 33 cents in the dollar.                    of child support they pay and their student loan
                                                                       repayments. However, they can change back at
                       Example                                         any time.
                       Regan’s Trucks Ltd employs John and makes       The actual employer contribution is paid into
                       specified superannuation contributions on his   the superannuation fund—the employee doesn’t
                       behalf. John worked at Regan’s Trucks Ltd       receive the contribution in the hand. The value
                       for the full year 1 April 2006 to 31 March      of the employer contribution will be added to
                       2007. He received a salary during that year     the employee’s gross wages for the pay period
                       of $36,400. For the 2008 tax year Regan’s       and taxed at the appropriate rate using the PAYE
                       Trucks Ltd have elected to tax the specified    deduction tables. The rate will depend on the
                       superannuation contributions using a rate       employee’s tax code.
                       based on John’s previous year’s salary. As
                       his salary was less than $45,600, the SSCWT     Contributions treated as salary and wages are
                       rate is 21 cents in the dollar. The SSCWT to    subject to earners’ levy (included in the PAYE
                       be deducted from each employer contribution     deduction tables).
                       made during the 2008 tax year is 21 cents in
                       the dollar.
www.ird.govt.nz                                                                                         17

                                                                                                             Responsibilities
Withdrawal tax                                       ●   Withdrawals on partial retirement are
                                                         exempt (partial retirement means if all
This tax applies to employer contributions
                                                         employer and employee contributions to a
withdrawn from a superannuation fund, but not
                                                         superannuation fund cease). If a member of
to contributions made by employees, as long
                                                         a fund reduces their working hours to less
as the trustee of the superannuation fund can
                                                         than 30 hours a week as a lead-in to full
identify these separately.
                                                         retirement, they may make a withdrawal with
If you make contributions to a superannuation            no tax applying. The member must provide
fund on behalf of your employees, you may have           written notification that they don’t intend
to provide information to the superannuation             to increase their hours of paid employment
fund about any of your current or past                   in the future. The written notice also needs
employees. So if a withdrawal is made, the               a statement from the member’s employer(s)
correct amount of withdrawal tax can be                  that there is no agreement that work hours
determined. The information requested by                 will increase.
the superannuation fund could relate to an           ●   The withdrawal tax doesn’t apply when
employee’s period of employment, income details          funds are withdrawn after the employee
and superannuation contribution details. You             ceases employment (an exception to this may
need to be able to provide this information.             apply if the employee started within the last
                                                         two years, or if the employer contributions
Withdrawal tax exemptions where you may
                                                         to superannuation savings have increased by
be required to give information
                                                         50% or more in either of the last two years).
The withdrawal tax has a number of                       Ceasing employment doesn’t include an
exemptions. In some cases, you’ll need to                employee transferring from one employer
give information about an employee to a                  to another, related employer (employers are
superannuation fund to let the fund determine            related if they are separate employers but one
whether an exemption applies. Exemptions that            is a branch or division of the other, or if they
may require information include:                         are associated).
●   Contributions to a superannuation fund           ●   The tax doesn’t apply if withdrawals are
    made before 1 April 2000, and contributions          used to purchase a life annuity or pension,
    that continue at the same level as that of the       or an annuity or pension to be paid over 10
    last pay period ending before 1 April 2000,          or more years. Withdrawals made to meet
    are not subject to the withdrawal tax.               fund administration costs and the costs of
●   If an increase in an employer’s contributions        group and individual life, health, sickness or
    is required by a trust deed of the                   accident insurance on behalf of members are
    superannuation fund, if a contract exists            also exempt.
    before 1 April 2000, or if an employee’s
    salary increases and their percentage of         Other exemptions
    contribution from employers remains the          Where it can be proved that significant financial
    same, the contributions aren’t subject to        hardship exists, the tax will not apply. The fund
    withdrawal tax. You need to make sure you        has been provided with a list of events that may
    have kept sufficient records, including the      give rise to serious financial hardship.
    basis of any pay increase and whether that
                                                     Withdrawal tax doesn’t apply to withdrawals
    increase was over 50%.
                                                     necessary to settle the division of relationship
                                                     property.

                                                     Withdrawal tax doesn’t apply to any amount
                                                     withdrawn that has been subject to the optional
                                                     39% SSCWT rate.
18                                               EMPLOYER’S GUIDE
Responsibilities

                   Reducing withdrawal tax
                   The withdrawal tax is reduced by 25% for each
                   of the four income years prior to the year the
                   withdrawal is made, as long as the employee’s
                   taxable income and the employer specified
                   superannuation contributions are less than
                   $60,000 for each year. This means that if the
                   $60,000 threshold is not exceeded in all the
                   previous four years, no withdrawal tax applies
                   at all.

                    Note
                    Withdrawal tax doesn’t apply where an
                    employee’s gross annual earnings for each of
                    the previous four years are less than $60,000
                    and SSCWT of 33% has been deducted.
www.ird.govt.nz                                                                                         19

Part 2 – Record keeping and making payments
Records you need to keep                              PAYE intermediaries:
You must keep all wage records for at least seven     ●   Calculate the employer’s respective payroll
years, including all paysheets and PAYE payment           information.
receipts. Your records must be in English, unless     ●   Pay the employer’s respective employees,
you’ve asked us for approval to use another               including payment of any third party

                                                                                                             and payments
language.                                                 deductions.

                                                                                                               Records
To help with your record keeping, you can get         ●   Pay the employer’s respective tax deductions
specially designed wagebooks or computer                  (including student loans, KiwiSaver, child
payroll packages.                                         support, SSCWT and additional employee-
                                                          related deductions) to us.
    Note                                              ●   Meet all the employer record keeping and
    If you have a computer payroll system you             return filing requirements.
    must keep the same records as for a manual        Providing an employer has supplied the
    one. You may keep your records stored on          intermediary with all their relevant payroll
    CDRom or USB key, but you must be able to         information and gross payments, the
    print them out if we ask you to. You must         responsibility for applying the PAYE rules
    keep all business records for seven years.        correctly will rest with the intermediary and not
                                                      the employer.
PAYE intermediaries
Employers can hire a PAYE intermediary to
complete their payroll requirements. If a
PAYE intermediary is used, both the employer
and the intermediary must meet the following
requirements.
Employers need to:
●    Provide information requested by the
     intermediary within the time agreed by the
     employer and intermediary.
●    Pay employees gross salary or wages for the
     pay period into a trust account established by
     the PAYE intermediary by the date specified
     by the intermediary.
●    Keep records of the gross salary or wages
     paid for the period.

    Note
    The government subsidise or partly subsidise
    the cost of using a payroll intermediary. The
    subsidy is available to small employers and
    for up to five employees per month. To
    get the subsidy you must use a listed PAYE
    intermediary. The listed PAYE intermediary
    will receive the subsidy provided certain
    conditions are met.
20                                                                                                                                                              EMPLOYER’S GUIDE

               Manual record keeping                                                                              ●       Keep a summary that shows the following
                                                                                                                          totals for each deduction period:
               Get into a routine:
                                                                                                                          – gross wages
               ●    Start a new page in your wagebook as soon                                                             – PAYE deductions
                    as an employee starts work with you or at the                                                         – child support deductions
                    beginning of each tax year. Make sure they                                                            – student loan deductions
                    give you the personal details you need.                                                               – KiwiSaver deductions
               ●    Keep a separate page for each employee, even                                                          – SSCWT.
and payments

                    if they were only employed for one day.
                                                                                                                  The information in your wagebook will help you
  Records

               ●    Complete all these wage details each payday:
                                                                                                                  fill in each IR 345 or IR 346 form (see page 23),
                    – total gross earnings, including taxable
                                                                                                                  and the Employer monthly schedule (IR 348)
                      allowances (the amount before PAYE is
                                                                                                                  (see page 25).
                      deducted)
                    – the amount of PAYE deductions                                                                     Note
                    – any child support deductions
                    – any KiwiSaver deductions                                                                         When completing the Employer monthly
                    – any student loan deductions                                                                      schedule (IR 348) it doesn’t matter when a
                    – any SSCWT (see page 15)                                                                          pay period starts or ends. Only include those
                    – the value of tax-free reimbursing                                                                deductions from gross earnings actually paid
                      allowances.                                                                                      or credited to employees during the period
                                                                                                                       covered by the schedule.
               ●    Summarise the details for each employee at
                    the end of each deduction payment period.
                    This will be either twice-monthly or monthly,
                    depending on whether you are a large or small
                    employer—see page 21.
                                                                                                                                              Your employee gives you this code on
               Start a new page for each employee                                                                                                  the Tax code declaration (IR 330)

                    Wagebook
                   (a) Name               Timote Paraone                                                                                      92 - 1 2 3 - 4 5 6
                   (b) Address        890 Adelaide St, Petone                                                                                 M SL                 Date applied    14 / 12/ 2006
                   (c) Occupation         Builder                                                       Annual holidays Start date                                 Finish date

                   (d) Date started       14 December 2006
                      Week            Gross pay             PAYE calculated  Child support deductions Student loan deductions     KiwiSaver deductions                 Net after
                                                                                                                                                           Total       tax and   Non taxable     Net pay
                     ending      For week For month       For week For month For week For month For week For month                For week For month     deduction    deduction allowances      to worker

                      6/7/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63   427 37                     427 37
                     13/7/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63   427 37                     427 37
                     20/7/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63   427 37                     427 37
                     27/7/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63   427 37                     427 37
                     July 07                   2,400 00               491 32                                            103 20                   96 00       690 52 1,709 48                   1,709 48
                      3/8/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63 427 37                      427 37
                     10/8/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63 427 37                      427 37
                     17/8/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63 427 37                      427 37
                     24/8/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63 427 37                      427 37
                     31/8/07        600   00                 62 83
                                                           122  85                                          25   80                  24 00                   172 63 427 37                      427 37
                    August 07                  3,000 00               614 15                                            129 00                  120 00       863 15 2,136 85                   2,136 85

               Copy monthly totals to the summary

                    Monthly summary of wages and tax deductions                                                                   For month ending           31 August 2007
                                                                                 PAYE       Child support    Student loan        KiwiSaver         Total       Net after tax     Non taxable   Net pay to
                                                              Gross pay        calculated    deductions       deductions         deductions     deductions    and deductions     allowances    employee
                    Ross Davies (12-173-142)                   1,540 00           295 53                                                            295 53       1,244 47                        1,244 47
                    Tim Paraone (92-123-456)                   3,000 00           614 15                              129 00         120 00         863 15       2,136 85                       2,136 85
                                                               4,540 00           909 68                              129 00         120 00       1,158 68       3,381 32                       3,381 32
www.ird.govt.nz                                                                                        21

Paying deductions to Inland                        New employers become a large employer if their
                                                   gross annual PAYE and SSCWT deductions go
Revenue                                            over $100,000 in the first year of employing.
If the PAYE deduction due date for payment falls
on a Saturday, Sunday, or public holiday, you      Large employers must pay the deductions:
can make your payment on the next working          ●       from wages paid between the 1st and 15th of
day without penalty.                                       the month by the 20th of the same month

Large employers pay their PAYE and other           ●       from wages paid between the 16th and the

                                                                                                            and payments
deductions twice-monthly. Small employers pay              end of the month by the 5th of the following

                                                                                                              Records
once a month. Whether you are a large or small             month, except for the second period of
employer depends on your gross annual PAYE                 December, which is due on 15 January.
deductions. Gross annual PAYE deductions are
the total PAYE deductions made, including any          Period PAYE deducted          Due date
SSCWT deductions, but excluding earners’ levy,         1 to 15 July 2007             20 July 2007
student loan repayments, KiwiSaver deductions
and child support.                                     16 to 31 July 2007            5 August 2007

We send you an Employer deductions (IR 345)            1 to 15 August 2007           20 August 2007
or (IR 346) form before the due date for each
                                                       16 to 31 August 2007          5 September 2007
payment. Fill in this form with the details for
the period, and send it with your payment. See
page 23 for more information about these forms.    Any payments not received by the due date will
                                                   be liable for a late payment penalty and interest
Employers who file manual returns will also        (see page 43).
receive an Employer monthly schedule (IR 348)
each month—see page 25 for more information.           Note

Are you a small employer?                              In deciding whether you’re a large employer,
If your gross annual PAYE and specified                we treat the following as one employer
superannuation contribution withholding tax            ●    any companies in a group that have 66%
(SSCWT) deductions are less than $100,000                   or more common ownership
you’re a “small” employer. You must pay PAYE           ●    all partners in a partnership
monthly. PAYE deducted in one month is due by
                                                       ●    all persons who have control of the same
the 20th of the following month.
                                                            property, such as
                                                            – a deceased person’s estate, or
 Example
                                                            – a company in liquidation.
 An employer pays wages fortnightly on
 Thursdays.
                                                   Are you a new employer?
  Period PAYE deducted      Due date               If your gross annual PAYE deductions go over
  August 2007 (two paydays)                        $100,000 at any time during the first year of
  9 and 23 August 2007    20 September 2007        employing we’ll send IR 345 (or IR 346) forms
                                                   so you can pay twice-monthly. You’ll also need
                                                   to register for electronic filing (ir-File)—see page
Are you a large employer?                          31 for more information.
If your gross annual PAYE and SSCWT
deductions were $100,000 or more in the
previous year ended 31 March, you’re a
“large” employer.
22                                                                                 EMPLOYER’S GUIDE

               Large employers with other pay                        Salary and wages paid irregularly
               periods                                               The due date for paying the deductions depends
                                                                     on the date you pay wages.
               In all the following situations, the due dates are:
               ●    the 20th of the month in which the deductions    Remember, if you don’t pay wages in any period,
                    were made (for deductions made between the       you must still file a nil Employer deductions
                    1st and the 15th of the month)                   (IR 345) or (IR 346) form, and Employer
                                                                     monthly schedule (IR 348) (see page 23).
               ●    the 5th of the month following the month the
and payments

                    deductions were made (for deductions made
  Records

                    between the 16th and the end of the month),
                    except for the second period of December,
                    which is due on 15 January.

               Salary and wages paid once a month on the
               same day each month
               On request, we can send only one Employer
               deductions (IR 345) or (IR 346) form per
               month. The due date depends on the date of
               deduction.

               Salary and wages paid every four weeks
               Generally, deductions have to be paid once a
               month. However, there may be occasions when
               deductions are paid twice a month. This is
               because the payday falls on a different day each
               month.

               Example

                   Date wages paid            PAYE period ending         Due date

                   10 September 2007          15 September 2007          20 September 2007

                   8 October 2007             15 October 2007            20 October 2007

                   5 November 2007            15 November 2007           20 November 2007

               Salary and wages paid every three weeks
               Deductions may have to be paid once or twice
               a month, depending on which day in the month
               the payday falls.

               Example

                    Date wages paid            PAYE period ending         Due date

                    3 September 2007           15 September 2007          20 September 2007

                    24 September 2007          30 September 2007          5 October 2007

                    15 October 2007            15 October 2007            20 October 2007

                    5 November 2007            15 November 2007           20 November 2007
www.ird.govt.nz                                                                                        23

Employer deductions forms                             Total deductions payable (Box 7)

(IR 345 and IR 346)                                   Add up all the deductions made during the
                                                      period and show this figure in Box 7. This is the
We send you an IR 345 form before you have to
                                                      amount to pay us.
make each payment. This is for you to record
the deduction details and send them with your         “Nil” IR 345 or IR 346
payment. If you’re registered with us as a payer
                                                      If you don’t pay salary or wages in any period,
of SSCWT, you receive an IR 346 form instead.
                                                      send in a nil IR 345 or IR 346. If you don’t send

                                                                                                            and payments
Read these notes about the IR 345, as they also
                                                      one in, we’ll ask you to explain why you haven’t

                                                                                                              Records
apply to the IR 346. The IR 346 has one extra
                                                      made a payment. Also send in any IR 348
box for entering the SSCWT deductions.
                                                      schedules with preprinted details.
Fill in the details on the IR 345 and send it to us
                                                      Complete the IR 345 or IR 346 showing the
with your payment.
                                                      period no PAYE was deducted and enter 0.00
If you’re paying your PAYE electronically (see        in Boxes 7 and 8. Sign it and send it to us in
page 31) you must still complete the Employer         the envelope provided, along with any IR 348
deductions (IR 345) or (IR 346) forms you can         schedules.
do this electronically using ir-File – see page 31.
                                                      If you have ceased employing please refer to
If you don’t receive an IR 345 or IR 346 in time,     page 32.
you must still make your payment. Send a note
with your payment that shows the IR 345 or            Completing the IR 346
IR 346 details as well as your name and IRD           If our records show you pay SSCWT, we send
number.                                               you an IR 346 form instead of an IR 345. The
                                                      difference between the deduction forms is that
Completing the IR 345                                 the IR 346 has two additional “Boxes”.
Enter the following details for the period covered
                                                      KiwiSaver employer contributions (Box 7)
by the IR 345.
                                                      Total the KiwiSaver contributions you have
PAYE deductions and withholding tax (Box 3)           made to your employee’s KiwiSaver scheme.
Print the total PAYE deducted from your               Enter this figure in Box 7.
employees’ gross earnings during the period.
                                                      SSCWT deductions (Box 8)
Also include withholding tax deductions in            Total the SSCWT deductions you have made.
this box.
                                                      Enter this figure in Box 8 of the IR 346.
Child support deductions (Box 4)
Total the child support deductions made for all        Note
employees for the period and enter the figure in
                                                       Remember, if you have made deductions for
Box 4.
                                                       employees’ arrears, don’t show these on your
Student loan deductions (Box 5)                        employer deduction forms IR 345 or IR 346.
Total the student loan deductions made for all         Instead, attach a copy of the deduction
employees for the period and enter the figure in       notice.
Box 5.

KiwiSaver deductions (Box 6)
Total the KiwiSaver deductions made for all
employees for the period and enter this figure in
Box 6.
24                                                                                                                                            EMPLOYER’S GUIDE

                Employer deductions                                                                                                                    IR 345
                                                                                                                                                       February 2007

                                                             For more information:      website www.ird.govt.nz, telephone 0800 377 772, INFOexpress 0800 257 773

                                                             Please see notes on the back for help filling out this form and the IR 348 schedule.
                    Champion Car Repairs Ltd                                                     IRD number      1         11-476-829                                   These will be
                    5 Parkhill Drive                                                                                                                                    preprinted
and payments

                    Tauranga                                                                     Period ended    2       31 August 2007
  Records

                                                                                 PAYE deductions
                                                                                 and withholding tax
                                                                                                                  3                      2 55 3 7 7
                                                                                 Child support deductions         4

                                                                                 Student loan deductions          5                           66 3 0
                                                                                 KiwiSaver
                                                                                 deductions
                                                                                                                  6                          22 2 2 0
                Your copy                                                        Total payable                   7                       2 84 2 2 7
                                                                                 Add Boxes 3, 4, 5, and 6.
                Keep this top part for your records.

                     Tear off here. Send this part to Inland Revenue.
                                                                                                                                                       IR 345

                                                                  Inland Revenue copy
                    Champion Car Repairs Ltd                                                     IRD number       1       11-476-829
                    5 Parkhill Drive
                    Tauranga                                                                     Period ended     2       31 August 2007
                                                                                 PAYE deductions
                                OFFICE USE ONLY                                  and withholding tax
                                                                                                                  3                      2 55 3 7 7
                                                                                                                                                                        Totals from
                     Operator        Corresp.     Payment        Return          Child support deductions         4                                                     employer
                     code            indicator    attached   Y   cat.
                                                                                                                                                                        monthly
                                                                                 Student loan deductions          5                           66 3 0                    schedule
                                                                                 KiwiSaver
                                                                                 deductions
                                                                                                                  6                          22 2 2 0
                                                                                                                                                                        This is the
                                                                                 Total payable                   7
                    Declaration I declare that the information given             Add Boxes 3, 4, 5, and 6.                               2 842 2 7                      amount to
                    in this return is true and correct.                                                                                                                 pay to Inland
                     Signature
                                                                                                                                                                        Revenue
                                                             15 09 07                Has payment been made electronically? (Tick one)            Yes        No
                                                                  Date

                                                                                                                                                          DED
                                                                  Payment slip

                      Champion Car Repairs Ltd                                                   IRD number     11-476-829
                      5 Parkhill Drive                                                           Period ended   31 August 2007
                      Tauranga
                                                                                                 Amount of        8
                                                                                                 payment                                 2 84 2 2 7
                    This return and any payment are due                                          Copy your total from Box 7 to Box 8 and include any late
                                                                                                 payment penalties and interest, for this period only.
                     20 September 2007
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