Other deduction obligations
As an employer, you could be asked by an employee or the government to make non-tax-related salary or wage deductions on the employee’s behalf.
This could be to satisfy the payment of child support or contribute to a private retirement fund, or even to an approved charity.
On this page:
- Tax on schedular payments
- Student loan repayments
- Child support
- Superannuation fund contributions (non-KiwiSaver)
- Payroll giving
Schedular payments are payments you make to certain self-employed contractors you hire.
These types of payments are taxed at a flat rate different to the PAYE rates used for employee salaries and wages. These flat rates must be used even if the contractor is GST-registered.
The tax rates for a schedular payment differ depending on the type of activity the contractor carries out for you. A contractor’s schedular payments must be taxed unless they have a certificate of exemption.
Find out more with Inland Revenue.
The repayment obligation for an employee’s student loan is determined by the tax code they choose.
The PAYE deduction tables provided to all employers help you find out the right amount to deduct, but you can also use Inland Revenue’s online PAYE/KiwiSaver calculator to work it out.
An employee can ask you to make extra student loan repayment deductions from their salary or wage, while the government can also request you to make compulsory extra deductions.
Find out more about student loans with Inland Revenue.
If an employee is required to pay child support, you will receive a letter from Inland Revenue Child Support telling you the amounts to deduct from the employee’s salary or wages.
Before doing so, Inland Revenue Child Support may contact you for information on:
- how often you pay wages
- the next regular payday or pay period for the employee
- whether you want an employee reference on the notice which is sent to you.
As an employer, you are obligated to keep making child support payments until Inland Revenue Child Support instruct you to stop.
Find out more about child support with Inland Revenue.
KiwiSaver isn’t the only superannuation fund available to your employees, they may already have existing funds set up with private providers or opt for one in the future.
As part of these arrangements, you may be required to make deductions from employee salaries or wages to contribute to these funds.
The key thing to remember is that if you make any employer contributions – as opposed to employee deductions - you will be liable for ESCT (employer superannuation contribution tax).
If you file your PAYE and payroll deductions online using Inland Revenue’s ir-File service, you can offer your employees the opportunity to contribute to an approved organisation with deductions made from their salary or wages.
By doing so, your employees also receive a tax credit.
Find out more about payroll giving with Inland Revenue.