PAYE Explained

PAYE (Pay As You Earn) is a tax deducted by you from your employee's salary or wages and paid directly to IRD on their behalf each month.

The rate of tax that you deduct is determined by the IR330 Tax Code Declaration form that each employee must complete when they start work (you must retain this form on their employee file). If your employee does not complete an IR330 you must deduct tax at the "no-notification" rate.

PAYE returns and payment are due to the IRD by the 20th of the month following. However, if your gross annual PAYE deductions are $500,000 or more you are required to pay PAYE twice a month as follows:

  • from wages paid between the 1st and 15th of the month by the 20th of the same month
  • from wages paid between the 16th and the end of the month by the 5th of the following month, except for the second period of December, which is due on 15 January

Also, if the annual PAYE deductions are over $100,000, the IRD will require you to file the PAYE returns on line.

To complete your PAYE you must file two forms with IRD:

  1. IR345: this is the form to record and pay the deductions made from your employee's pay.
  2. IR348: this is the form which records the details of each employee's deductions.

For more information on PAYE please call us or alternatively refer to the IRD website

If you wish to outsource your payroll to give you more time to grow your business you may like to consider: