What is PAYE and Payday Filing (New Zealand)?
PAYE (Pay As You Earn) is the system under which New Zealand employers deduct income tax and ACC earners' levy from employees' wages and remit to IRD. Since April 2019, employers must file employment information within 2 working days of each payday (payday filing).
Current Rate (Per payday. Monthly payment due date: 20th of the following month.)
Income tax rates: 10.5% (to NZD 15,600), 17.5% (to NZD 53,500), 30% (to NZD 78,100), 33% (to NZD 180,000), 39% (above NZD 180,000). ACC earners' levy: 1.67% of gross earnings (2025/26).
Example
An employee earns NZD 70,000 gross annually. Tax on NZD 15,600 at 10.5% = NZD 1,638; on NZD 37,900 at 17.5% = NZD 6,633; on NZD 16,500 at 30% = NZD 4,950. Total income tax = NZD 13,221. ACC levy = NZD 1,169. Total PAYE deductions = NZD 14,390 annually.
How PAYE and Payday Filing (New Zealand) works in New Zealand
PAYE is the cornerstone of New Zealand's personal tax collection. Unlike some countries, New Zealand has no universal tax-free threshold: income tax applies from the first dollar earned, though the effective rate on low incomes is modest given the 10.5% rate on the first NZD 15,600.
**Payday Filing (since 1 April 2019)** From April 2019, all employers must file employment information (the EI schedule) with IRD within 2 working days of each payday. This replaced the old monthly employer monthly schedule (EMS) system. The EI details each employee's gross earnings, PAYE deducted, KiwiSaver contributions, student loan deductions and child support deductions for that pay run. Filing is done via payroll software integration or by uploading to myIR.
**Payment of Deductions** Although employment information is filed per payday, the actual payment of deductions (PAYE, student loan, KiwiSaver, ACC earners' levy) is remitted by the 20th of the following month for most employers. Large employers (annual PAYE and ESCT over NZD 500,000) must pay twice monthly: 20th of the month and 5th of the following month.
**Tax Codes** Employees must provide their employer with a tax code declaration (IR330). The main codes are: M (primary income), M SL (primary income with student loan), ME (M with independent earner tax credit applied), S (secondary income, 17.5%), SH (secondary income, 30%), ST (secondary income, 33%). Employees who do not provide a code are taxed at the no-notification rate of 45%.
**ACC Earners' Levy** All employees (and self-employed) pay the ACC earners' levy of 1.67% of gross earnings (2025/26), capped at the maximum liable earnings of NZD 142,283 per year. Employers deduct this alongside PAYE. The levy funds personal injury compensation through the Accident Compensation Corporation. Self-employed individuals pay both an earners' levy and a work levy through their individual income tax return.
**Independent Earner Tax Credit (IETC)** Individuals with annual income between NZD 24,000 and NZD 48,000 who do not receive Working for Families or certain other credits are entitled to the IETC of NZD 520 per year. It is applied via the ME tax code through payroll or claimed in the individual return.
**Employment Information Amendments** If an employer discovers an error in a filed EI, they must file an amendment through myIR within 10 working days of discovering the error (or as soon as practicable). Late filing penalties apply for employers who consistently fail to file on time.
Related terms
KiwiSaver is New Zealand's voluntary workplace retirement savings scheme. Employers must contribute at least 3% of each employee's gross wages (rising to 3.5% from 1 April 2026 and 4% from 1 April 2028). Employees also contribute a minimum of 3%, with employer contributions subject to ESCT.
FBT is paid by employers on non-cash benefits provided to employees, such as company vehicles for private use, low-interest loans, and employer contributions to insurance. FBT rates reach 63.93% on attributed benefits for employees paying the 39% top income tax rate.
An IRD number is the 8 or 9-digit tax identification number issued by Inland Revenue to individuals, companies and other entities in New Zealand. It is required to pay tax, employ staff, register for GST, and open a business bank account. The NZBN (NZ Business Number) is the separate 13-digit public business identifier.
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