PAYE
PAYE (Pay As You Earn) is the system that New Zealand employers use to deduct income tax from employees' wages and salaries. Employers calculate the correct amount of tax based on IRD-set tax codes and pay it directly to Inland Revenue on the employee's behalf. This means most employees do not need to file a separate tax return at year end.
PAYE covers more than just income tax — ACC earner's levy, KiwiSaver contributions, and student loan repayments are all deducted through the same system. Your employer uses the tax code you provide (e.g. M, ME, S) to determine the correct deduction rates.
If your tax code is wrong or you have untaxed income, you may end up with a tax bill or refund after IRD completes your end-of-year income assessment. You can check and update your tax code through myIR at any time.
Related Terms
Income Tax
New Zealand income tax is calculated using a progressive bracket system.
Tax Code
A tax code is a code you provide to your employer (on an IR330 form) that determines how PAYE is calculated on your pay.
IRD
Inland Revenue Department (IRD), commonly known as Inland Revenue or simply IRD, is the New Zealand government agency responsible for collecting taxes, distributing social support payments, and enforcing tax compliance.
Try the calculator
Use our free tool to see how paye affects your tax.