End-to-end payroll workflow for New Zealand employers: set up PAYE deductions, KiwiSaver and ACC employer levies, and file the payday employment information (EI) form to Inland Revenue within two working days of each payday, with annual reconciliation via IR348.
Before running any payroll, the employer must be registered as an employer with Inland Revenue and have a valid IRD number. This phase confirms the employer's IRD number, registers for PAYE if not already done, and collects the employee's IR330 (Tax code declaration) and KiwiSaver enrolment details (KS2 or automatic enrolment). The employer must also set up a payroll system (Xero Payroll, MYOB, or similar) configured for payday filing.
Calculate gross wages including salary/wages, allowances, overtime, and any extra pay (bonuses, redundancy). Apply the correct PAYE tax code from the employee's IR330 — most commonly M (primary employment) or S (secondary employment). Use IRD's PAYE deduction tables (IR340 for weekly/fortnightly, IR341 for four-weekly/monthly) to determine the PAYE deduction. ACC earner levy at $1.67 per $100 of gross earnings (up to the maximum liable earnings cap of $142,283) is collected by IRD as part of the PAYE process.
Deduct the employee's KiwiSaver contribution at their elected rate (3%, 4%, 6%, 8%, or 10% of gross earnings) and calculate the employer's compulsory contribution at a minimum of 3% of gross earnings. The employer contribution is subject to Employer Superannuation Contribution Tax (ESCT), deducted before remitting to Inland Revenue. If the employee has a student loan, deduct repayments at 12 cents per dollar of repayment threshold income above $22,828 per year.
Since April 2019, employers must file Employment Information (EI) to Inland Revenue within two working days of each payday (or on payday for employers using payroll software with direct filing). The EI return reports each employee's gross earnings, PAYE, KiwiSaver deductions, employer contributions, ESCT, student loan repayments, child support, and hours worked. File via myIR or direct from payroll software using the payday filing API. The PAYE and deductions collected must be paid to IRD by the 20th of the month following the deduction (or the 5th for large employers with PAYE > $500,000 per year).
Each month, reconcile total PAYE, KiwiSaver, ESCT, student loan repayments, and child support deducted across all paydays against the amounts paid to Inland Revenue. Ensure the payment clears by the 20th (or 5th for large employers) to avoid late payment penalties of 1% initial plus 4% after 7 days. Check myIR account balance for any discrepancies between filed EI amounts and payments received by IRD.
At year end (31 March), prepare the Employer Annual Reconciliation (IR348) summarising total gross wages, PAYE, KiwiSaver and ESCT for all employees for the tax year. Under payday filing this is largely auto-populated from EI returns in myIR, but must be reviewed, corrected if necessary, and confirmed. Issue each employee with their Summary of Earnings (IR348 employee summary) so they can complete their individual income tax return (IR3) or have Working for Families credits assessed. The deadline for filing the IR348 is 31 May.
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