PAYE (Pay As You Earn) is the basic amount of income tax you take out of your employees’ wages whenever you pay them. PAYE includes an ACC earners’ levy. (IR 335)

First-time employers should remember these basic PAYE steps:

  • Understand the minimum pay entitlements for all employees
  • Ensure the correct calculation of wages
  • Keep accurate records
  • Pay Inland Revenue
  • Understand the Kiwisaver employer responsibilities

ACC earners’ levy:

Almost all earnings subject to PAYE are liable for the ACC earners’ levy, which include:

  • wages and salaries
  • overtime pay
  • back pay and holiday pay
  • long-service leave pay
  • bonuses or gratuities
  • taxable allowances
  • shareholder-employee salaries that have PAYE deducted
  • salaries to partners in a partnership
  • salaries to working owners of a look-through company

IRD collects the ACC earners’ levy on behalf of the ACC. For employees, this levy has been built into the PAYE tables and is deducted along with the tax.

If you need help in understanding this or any other tax topic, and how it relates to your business please contact us