Altering an employee's tax code as specified by IRD (New Zealand)
The Tax Code Deduction Certificate instructs the employer to deduct PAYE and/or Student Loan at a non-standard rate over a specified period.
The Tax Code Deduction Certificate should specify to the employer the required Tax Code to be used. The Certificate often specifies the Special Tax Code (STC) and a particular rate of PAYE and student loan repayment. When a particular PAYE rate is required, STC is likely to be the appropriate code. If there is any doubt about the wording of the certificate, the employer should ask the Inland Revenue for clarification.
An example of the changes specified by the Tax Code Deduction Certificate would be:
"Deduct PAYE at a rate of 18 cents for each dollar of gross income. This rate includes Earner Levy. Student loan deduction should be deducted at a rate of 12 cents for each dollar of gross income."
Make the changes in Employee Maintenance as follows:
- Set the employee's Tax Code to the code specified (in most instances the STC code)
- If it is stated that the tax rate includes Earner Levy then the "Add Earner Levy" option MUST ALWAYS be checked
- Enter the Tax Rate as specified by the Certificate. If it is stated that the tax rate includes Earner Levy then make sure the rate being entered is minus the Earner Levy %. (In the above example the rate to be entered would be 16.6. Once the 1.4% earner levy is added to the 16.6% tax rate then this will give the 18% as specified in the Certificate). Note that the employer must use the correct earner levy rate, and this can change (was 1.4% in early 2009 when this example was created).
- Enter the Student Loan rate as specified in the Certificate (In the above example the rate would be set to 12.00)
Need more help? You can open the online help by pressing F1 on your keyboard while in your software.
You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.