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Income Tax Act 2007

General collection rules - Employment-related taxes - Types of PAYE income payments

RD 6: Certain benefits and payments

You could also call this:

“Benefits and payments considered part of your income for tax purposes”

This section of the Income Tax Act 2007 explains how certain benefits and payments to employees are treated for tax purposes. Here’s what you need to know:

You might receive benefits or payments from your employer that are counted as part of your income. These can include:

  • Benefits that are treated as income under the law
  • Other benefits that are part of your salary or wages
  • Superannuation payments, pensions, retirement allowances, or annuities
  • Benefits from employee share schemes that your employer has chosen to treat in a certain way
  • Payments made to you if you’re on a shadow payroll

The value of these benefits or payments is treated as if you receive a little bit each day, and it’s included in your salary or wages for each pay period.

If you get a benefit that’s not cash, it’s treated as being paid to you:

  • On a specific date for employee share scheme benefits
  • On the last day of the pay period if it’s your only salary or wages
  • When your last bit of salary or wages for the pay period is paid, for other benefits

For people on shadow payrolls (which means you work in New Zealand but are paid by an overseas employer), the payment is treated as being made on the day your overseas employer pays you, or 20 days after that.

A shadow payroll payment is when a non-New Zealand employer pays you for work you do in New Zealand, but you stay on their overseas payroll system.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519950.

Topics:
Money and consumer rights > Taxes
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Part R General collection rules
Employment-related taxes: Types of PAYE income payments

RD 6Certain benefits and payments

  1. This section applies when an employee receives—

  2. a benefit treated as income under section CE 1(1)(bb) (Amounts derived in connection with employment); or
    1. another benefit in kind that is included in their salary or wages; or
      1. 1 or more of the following payments:
        1. a superannuation payment:
          1. a pension:
            1. a retiring or other allowance:
              1. an annuity; or
              2. a benefit under section CE 1(1)(d) (Amounts derived in connection with employment) in relation to which the employer has made an election under section RD 7B; or
                1. a payment made to them as a person on a shadow payroll.

                  1. For the purposes of subsection (1)(a) to (c), the value of the benefit or amount of the payment is treated as—

                  2. accruing from day to day; and
                    1. included in the employee’s salary or wages for the pay period or, as applicable, as part of their salary or wages for the pay period.

                      1. If the employee receives the benefit otherwise than in cash, the value is treated as paid—

                      2. for a benefit referred to in subsection (1)(d), on the ESS deferral date on which the employee is treated as deriving the benefit under section CE 2(8) (Benefits under employee share schemes); or
                          1. for a benefit referred to in subsection (1)(a) to (c) that constitutes the only salary or wages of the employee, on the last day of the pay period:
                            1. for a benefit that paragraphs (a) and (b) do not apply to, when the last amount of salary or wages for the pay period is paid.

                              1. For the purposes of the PAYE rules, a payment referred to in subsection (1)(e) is treated as paid to the employee—

                              2. on the day that the amount is paid by the non-resident employer, that is the payday for the purposes of sections 23E to 23H and 23J(2) of the Tax Administration Act 1994:
                                1. on the 20th day after the amount is paid by the non-resident employer, that is the 20th day referred to in section 23J(3) of that Act.

                                  1. For the purposes of this section, a payment made to a person on a shadow payroll is a PAYE income payment paid by a non-resident employer to a person who undertakes employment services in New Zealand but who remains on the employer’s payroll system in a country or territory outside New Zealand.

                                  Compare
                                  Notes
                                  • Section RD 6(1)(d): inserted, on (applying for the 2017–18 and later income years), by section 55(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                  • Section RD 6(1)(d): amended, on , by section 191(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(1)(d): amended, on , by section 190(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(1)(e): inserted, on , by section 191(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(2): amended, on (applying for the 2017–18 and later income years), by section 55(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                  • Section RD 6(3)(a): replaced, on , by section 191(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(3)(ab): inserted, on (applying for the 2017–18 and later income years), by section 55(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                  • Section RD 6(3)(ab): repealed, on (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section RD 6(3)(b): replaced, on (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section RD 6(3)(c): inserted, on (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section RD 6(4) heading: inserted, on , by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(4): inserted, on , by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(5) heading: inserted, on , by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6(5): inserted, on , by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms accommodation: inserted (with effect on 1 April 2008), on , by section 505(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                  • Section RD 6 list of defined terms amount: inserted, on (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                  • Section RD 6 list of defined terms employer: inserted, on (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                  • Section RD 6 list of defined terms employment income information: inserted, on , by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms ESS deferral date: inserted, on , by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms New Zealand: inserted, on , by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms non-resident: inserted, on , by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms PAYE income payment: inserted, on , by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms PAYE income payment form period: repealed, on , by section 191(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                  • Section RD 6 list of defined terms share purchase agreement: inserted, on (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).