PAYE Calculator NZ
This simple PAYE calculator is perfect for checking what percentage of your pay is going to tax, student loans and KiwiSaver. More importantly, it will tell you exactly how much of your hard earned dollars you actually get to take home! Whether you’ve just had a pay rise, or you want to check whether your employer is paying the right amount of PAYE on your behalf, simply enter your before-tax income into the calculator below, and you’ll get a break down per hour, week, fortnight, month or year.
Don’t forget to check if you have a tax refund owing for any of the last five years! If you’ve been overpaying PAYE, or only worked for a part of a year, you could have a refund waiting.
What is PAYE?
PAYE stands for Pay As You Earn. In New Zealand, the PAYE system covers all salary and wage earners. Your employer deducts your tax obligation and ACC earner’s levy before you receive your pay and this amount is sent to the Inland Revenue Department on your behalf. The system is designed to make it easier for earners to pay their tax obligation without needing to set money aside for tax season (as happens in some other countries). When you start with an employer, you’ll fill out a tax code declaration based on your expected income and your circumstances (such as whether or not you have a student loan to repay). Your employer then uses that tax code to deduct the correct amounts of PAYE tax during the year so that you should not have to pay tax at the end of the year.
While PAYE is generally a good system for ensuring the correct tax is deducted, there are many reasons that you might have overpaid your tax obligations through PAYE. Some of the reasons this can occur are:
- You were on the wrong income tax rate during the year – if your income tax rate was incorrect because of using the wrong tax code, or if your employer calculated your PAYE incorrectly in their payroll system, you may end up overpaying your PAYE
- You worked for only a part of the year, or you changed jobs during that time – your tax obligation via PAYE is calculated each time that your employer processes payroll. It does assume though, that this will continue in a similar way throughout the rest of the year. If you change jobs or don’t work for some of that year, you might have paid tax at a higher rate than your annual income tax obligation required.
- You worked irregular hours or did part-time or on-call work – for similar reasons as with working part of a year, unusual working arrangements and hours can lead to overpaid PAYE.
- Your income changed during the year – when you get that well-deserved pay rise, you may start paying PAYE in a higher tax bracket for part of the year. If your annual income doesn’t reach that bracket, you’ll probably be owed a tax refund.