PAYE – Calculation changes for manual filers

As part of the annual Government Budget 2024, from 31 July the personal income tax thresholds have increased.

Personal income tax thresholds from 31 July 2024

Annual composite tax rates 1 April 2024 to 31 March 2025

For the 2025 income year (1 April to 31 March 2025), because this change is part way through the year, the annual tax rates and thresholds are composites.

Changes for employees

If you are paid salary or wages you do not need to do anything. If your employer did not make the threshold change in time for 31 July, they can still make it at a later date. Any extra pay as a result of the change will either be in a later pay or come out as part of the end of tax year process.

NZ has a progressive income tax rate regime

This means the amount of tax on each additional dollar earned rises as overall annual income rises.

For example, someone earning $70,000 would pay:

• 10.5 cents in the dollar on their first $15,600 of income,

• 17.5 cents in the dollar on the next $37,900 of income,

• and 30 cents in the dollar on the last $16,500.

Changes for employers

If you use payroll software, your provider should have given you an update with the new rates. We recommend checking this has occurred.

File manually or don't use a software provider?

If you have not done so already, you will need to update your PAYE calculations and the amounts you pay to your employees going forward.

The IRD have updated their PAYE calculator with the new rates. You can use this to help you work out the required salary and wage deductions.

If you would like assistance with your calculations, or to discuss the above changes in more detail, please get in touch with your CT Advisor.

Cheers
Lincoln

Lincoln Sharp, Director

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This article contains general information only and based on information available at the date of publication. You should obtain advice for your personal circumstances.