NZ Company Payroll: Setting Up PAYE and Payday Filing in Your First Year
Hiring your first employee triggers a series of IRD obligations. Here is what every new NZ company director needs to know about PAYE, payday filing, KiwiSaver, and annual leave from day one.
When Payroll Obligations Begin
The moment your NZ company hires its first employee, you become an employer in the eyes of Inland Revenue. That triggers three immediate obligations: PAYE (Pay As You Earn) tax deductions, payday filing to IRD within two working days of each pay run, and KiwiSaver contributions and deductions. Missing any of these can result in penalties and interest, even for small companies where the director is also the only employee.
PAYE Registration
Before your first pay day, register as an employer with IRD through myIR. You will need your NZ company number and your IRD number. IRD will assign you an employer deduction account. If you are paying yourself as a director, you need to decide whether to take a salary (PAYE applies) or drawings (no PAYE, but provisional tax later). Most directors on salary process PAYE monthly or twice-monthly.
Payday Filing: The 2-Working-Day Rule
Since April 2019, all NZ employers must file employment information with IRD within two working days of each payday. This replaced the older monthly Schedule of PAYE. If you pay weekly, you file weekly. If you pay fortnightly, you file fortnightly. The filing is done through compatible payroll software (Xero Payroll, MYOB, iPayroll, SmartPayroll, Thankyou Payroll) or manually through myIR.
KiwiSaver Obligations
Employers must deduct KiwiSaver contributions from eligible employees at their chosen rate (3%, 4%, 6%, 8%, or 10%) and add the employer contribution (currently 3% minimum). Both amounts are paid to IRD with your PAYE deductions. New employees must be automatically enrolled unless they opt out within 56 days. Directors who are self-employed are not automatically enrolled but can voluntarily join.
Employer ACC Levies
As an employer you pay a work levy on your payroll to ACC, billed annually. The rate depends on your industry risk classification. You do not set this up separately; ACC calculates and invoices it based on your payroll figures reported to IRD. Your employees’ earner levies are deducted from their wages and appear on their payslips.
Getting the Set-Up Right From Day One
The most common mistakes new NZ company directors make with payroll: starting PAYE late, missing payday filing deadlines in the first month, and not enrolling new employees in KiwiSaver automatically. A payroll specialist or accountant can set up your payroll software, ensure correct tax codes, and handle the first few runs with you.
Looking for a payroll specialist or accountant to set up your NZ company payroll? Submit a request and we will connect you with a professional in your region.