PAYE and Lump Sum Calculations
Taxation in New Zealand is based on a progressive structure whereby, the more you earn, the higher the tax rate applied. The rate is determined on income thresholds as per the image below.
Scheduler Payments - Withholding Tax
Scheduler payments are not subject to ACC levies, the employee is billed by ACC for these when they file a tax return. Such employees normally pay Withholding Tax (must complete an IR330C) or they can gain an exemption from the IRD and have no tax deducted at source.
https://www.ird.govt.nz/income-tax/withholding-taxes/schedular-payments/getting-schedular-payments
Extra Pays, Lump Sum Payments, Termination Payments
Lump sum payments – also called extra pay – include:
- annual or special bonuses
- cashed in annual leave
- retiring or redundancy payments
- Termination Pay
- payments for accepting restrictive covenants
- exit inducement payments
- gratuities (tips)
- back pay
- back paid holiday pay
- lump sum holiday pay
- employee share scheme benefits – if you choose to deduct tax.
The rate of tax to deduct must be determined by using the following rules.
The Tax Rate applied is as per the rates here which apply to March 2024
