Tax Responsibilities in New Zealand
Once you have hired a nanny you become an employer under the Employment Relations Act, and as such are legally required to:
- have a written agreement, giving a copy to your nanny, prior to the nanny starting.
- pay ACC, employer and residual levies
- pay holiday pay including Statutory Holiday and sick pay
- Mileage should also be paid if the nanny needs to provide a car for the position.
This can be done through the IRD (can be a time consuming option!) or by using a payroll service (KiwiOz Payroll coming soon...)
LOCAL TAX OFFICE… what do I do?
- To register as an employer, use the online employer registration or download, print and complete an Employer registration form (IR334) and post it back to the IRD.
- To register, you need an IRD number for your employer records. You can use your existing IRD number if you already have one.
When you are registered...
· Make sure new employees fill in a Tax code declaration (IR330), which will tell you the tax code to use and the rate of tax to take out of their wages. If any employees don't fill in an IR330, you must deduct tax from their wages at a higher rate (called the no-declaration rate).
· Deduct PAYE from your employees' wages, and pay it to us either once or twice a month, depending on the total amount of wages you pay. PAYE includes the ACC earners' levy, to cover the cost of employees' non-work injuries.
· Complete an Employer deductions (IR345) or (IR346) form and send it with your payment by the due date. If you're unsure whether to use an IR345 or an IR346 phone us on 0800 377 772.
· Complete an Employer monthly schedule (IR348) with the details of each employees' deductions.
· Pay fringe benefit tax on any fringe benefits (perks) you give to your employees.
· Deduct child support payments from employees' wages if required.
· Deduct student loan repayments from employees' wages if required.
For other tax information please go to www.ird.govt.nz or call them on 0800 377 772.
If the nanny is working fewer than 30 hours a week with your family then it is the responsibility of the nanny to register for tax. She does this under a special provision for domestic workers. Workplace Accident Insurance is deducted also with the tax.
For employment advice please go the Employment relations website www.ers.govt.nz or phone them on 0800 800 863.
