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Income Tax Act 2007

General collection rules - Employment-related taxes - Calculating amounts of tax

RD 10: Amounts of tax for PAYE income payments

You could also call this:

“How much tax is taken from your pay”

When you get paid, your employer needs to take out some tax. This is called a PAYE income payment. The amount of tax they take out is set by the government in a list called Schedule 2. However, there are some special cases where the amount might be different.

If you get an extra payment, like a bonus, you can choose a different tax rate. This depends on how much money you think you’ll earn in the year. You can pick a lower rate if you don’t earn much, or a higher rate if you earn more.

If you’re a non-resident seasonal worker, there’s a special tax rate for your extra payments.

If you haven’t told your employer what your tax code is, they’ll use a specific rate for extra payments.

For some types of work, called schedular payments, the tax is worked out differently. It’s based on how much you get paid before GST is added.

The tax office (called the Commissioner) can give out tables to help work out how much tax should be taken from your pay.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519961.

Topics:
Money and consumer rights > Taxes
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“How to calculate and deduct tax from schedular payments”

Part R General collection rules
Employment-related taxes: Calculating amounts of tax

RD 10Amounts of tax for PAYE income payments

  1. The amount of tax for a PAYE income payment that a person must withhold and pay to the Commissioner under section RA 5 (Tax obligations for employment-related taxes) is the relevant amount under schedule 2 (Basic tax rates for PAYE income payments). Subsections (2), (2B), (2C), (2D), and (3) and sections RD 12 to RD 20C override this subsection.

  2. An employee who notifies their employer of their tax code may choose to have the amount of tax for an extra pay fixed as follows:

  3. for an employee whose taxable income for the income year is expected to be not more than $48,000, the rate set out in schedule 2, part B, table 1, row 3; or
    1. for an employee whose taxable income for the income year is expected to be not more than $70,000, the rate set out in schedule 2, part B, table 1, row 4; or
      1. for an employee whose taxable income for the income year is expected to be not more than $180,000, the rate set out in schedule 2, part B, table 1, row 5; or
        1. for other employees, the rate set out in schedule 2, part B, table 1, row 6.

          1. Despite subsection (2), a person must not choose a rate set out in schedule 2, part B, table 1 that is lower than the rate that would apply to the amount of extra pay under section RD 17.

          2. The amount of tax for an extra pay that is paid to a non-resident seasonal worker is calculated at the rate set out in schedule 2, part B, table 1, row 1 (Basic tax rates for PAYE income payments). This rate applies for both a worker who has notified their employer under section 24C of the Tax Administration Act 1994 of their tax code under schedule 2, part A, clause 8, and a worker to whom schedule 5, part B, clause 3 of that Act applies. This subsection overrides subsection (2).

          3. The amount of tax for an extra pay that is paid to an employee who has not notified their employer of their tax code is calculated at the rate set out in schedule 2, part B, table 1, row 7.

          4. The amount of tax for a schedular payment is determined—

          5. under section RD 10B; and
            1. on the basis of the gross amount of the payment, other than GST, whether—
              1. some or all of the payment is income; and
                1. the full income tax liability lies with the person receiving the payment, or lies partly with an employee or subcontractor of the person.

                2. The Commissioner may provide tables for the calculation of an amount of tax for a PAYE income payment that may incorporate other relevant information.

                Compare
                • 2004 No 35 ss NC 6, NC 8(1A)
                • Income Tax (Withholding Payments) Regulations 1979, regulation 3
                Notes
                • Section RD 10(1): amended, on , by section 114 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                • Section RD 10(1): amended, on , by section 198(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2): replaced, on , by section 5(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
                • Section RD 10(2B) heading: inserted, on (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
                • Section RD 10(2B): inserted, on (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
                • Section RD 10(2C) heading: inserted, on , by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2C): inserted, on , by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2C): amended, on , by section 5(2) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
                • Section RD 10(2C): amended, on , by section 198(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2C): amended, on , by section 198(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2D) heading: inserted, on , by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2D): inserted, on , by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section RD 10(2D): amended, on , by section 5(3) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
                • Section RD 10(3)(a): replaced, on , by section 90 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                • Section RD 10(3)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 124(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                • Section RD 10 list of defined terms non-resident seasonal worker: inserted, on , by section 198(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).