Guide
Small business payroll in New Zealand, explained
Paying staff in New Zealand means more than a wage in the bank. Here is a plain-English run through PAYE, KiwiSaver, holiday pay and payday filing, and how software takes the risk out of it.
The pieces of a New Zealand pay run
Every time you pay an employee, several things have to be calculated and reported. Get one wrong and it compounds over the year, so it pays to understand the parts.
PAYE
PAYE (pay as you earn) is the income tax you deduct from an employee gross pay and send to Inland Revenue on their behalf. The rate depends on their tax code and earnings. You also deduct the ACC earners levy as part of PAYE.
KiwiSaver
If your employee is in KiwiSaver, you deduct their contribution (3, 4, 6, 8 or 10 percent of gross) and add the compulsory employer contribution of at least 3 percent. Employer contributions are subject to ESCT (employer superannuation contribution tax), which is deducted from the employer contribution based on the employee income band.
Holiday pay and leave
The Holidays Act sets minimum entitlements: four weeks of annual holidays after 12 months, paid at the greater of ordinary or average weekly pay, plus public holidays, sick leave and bereavement leave. Casual or variable staff are often paid holiday pay at 8 percent of gross as they go. The Holidays Act is famously fiddly, which is exactly why manual payroll goes wrong.
Other deductions
You may also deduct student loan repayments, child support, or a KiwiSaver contribution for those who opt in. Each has its own rules and thresholds.
Payday filing
New Zealand uses payday filing: every time you pay staff, you file the employment information with Inland Revenue within two working days if you file electronically. It is no longer a monthly summary, it is per pay run. Missing it brings penalties.
Minimum wage and records
You must pay at least the adult minimum wage (reviewed each year, usually 1 April) and keep wage, time and holiday records for every employee for at least seven years. Records have to be accurate and produced on request.
Why this trips people up: the maths is not hard, but there is a lot of it, it changes every year, and the Holidays Act makes leave genuinely complex. Manual spreadsheets are where errors and back-pay bills come from.
How payroll software handles it
Good payroll software calculates PAYE, KiwiSaver, ESCT and leave correctly, files each pay run with Inland Revenue automatically, and keeps the records you are required to hold. In Countova, payroll sits on the same platform as your accounts, so every pay run posts its wage, PAYE and KiwiSaver journals straight to your ledger, and the cost shows up in your reports at once. No re-keying, no separate payroll product, no reconciling two systems.
Check the current detail. Rates, thresholds and the minimum wage change, usually each April. Confirm specifics with Inland Revenue and Employment New Zealand. This guide explains how payroll works, it is not legal or tax advice.
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