TAXING OF LUMP SUM PAYMENTS EFFECTIVE 1 APRIL 2016
Lump sum payments from primary employment – What is a lump sum payment?
Lump sum payments include annual or special bonuses, retiring or redundancy payments, payments for accepting restrictive covenants, exit inducement payments, gratuities or back pay. These are also called "extra pays".
Overtime or any regular payments are not lump sum payments.
PAYE applies to lump sum payments as follows:
• At a flat rate of 11.89 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is $14,000 or less
• At a flat rate of 18.89 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $14,001 to $48,000.
• At a flat rate of 31.39 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $48,001 to $70,000.
• At a flat rate of 34.39 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is greater than $70,000, but less than the ACC earners levy maximum threshold of $122,063 (for the 2017 tax year). Amounts above this level should have PAYE applied at 33%, or – when the employee asks you to use this rate.
IRD Mileage Rates
Inland Revenue released a statement on the 4th May following a review on mileage rates that there will be a reduction to the rate to 72 cents (from 74 cents for 2015) for both petrol and diesel vehicles for the 2016 income year.
iPayroll
Accounted4 are proud to be a Bronze Partner with iPayroll and recommend iPayroll to their clients.
Want an easy to use, trusted and proven online payroll that's perfect for Small to Medium businesses?
iPayroll established in 2001 as New Zealand's premier Internet based payroll service specifically designed for small to medium NZ based businesses with as few as one employee up to several hundred and were the first XERO Add-on Partner.
iPayroll is easy to use and will save you time and money.
As New Zealand's largest IRD listed online PAYE Intermediary they process upwards of $3.5 billion of customers payrolls every year.
•Simple 4 step process
•Manages leave, nett payments and PAYE, ir-filing for you.
•Employee Payslip Kiosk with leave requests
•Free ongoing use of help desk
A real plus is that by being a client of Accounted4 means you receive Special Discounted pricing. FREE TRIAL. www.ipayroll.co.nz or contact us for more information.
Lump sum payments include annual or special bonuses, retiring or redundancy payments, payments for accepting restrictive covenants, exit inducement payments, gratuities or back pay. These are also called "extra pays".
Overtime or any regular payments are not lump sum payments.
PAYE applies to lump sum payments as follows:
• At a flat rate of 11.89 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is $14,000 or less
• At a flat rate of 18.89 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $14,001 to $48,000.
• At a flat rate of 31.39 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is from $48,001 to $70,000.
• At a flat rate of 34.39 cents in the dollar
– when the combined total of the lump sum payment and the grossed-up annual value of the employee's income for the previous four weeks is greater than $70,000, but less than the ACC earners levy maximum threshold of $122,063 (for the 2017 tax year). Amounts above this level should have PAYE applied at 33%, or – when the employee asks you to use this rate.
IRD Mileage Rates
Inland Revenue released a statement on the 4th May following a review on mileage rates that there will be a reduction to the rate to 72 cents (from 74 cents for 2015) for both petrol and diesel vehicles for the 2016 income year.
iPayroll
Accounted4 are proud to be a Bronze Partner with iPayroll and recommend iPayroll to their clients.
Want an easy to use, trusted and proven online payroll that's perfect for Small to Medium businesses?
iPayroll established in 2001 as New Zealand's premier Internet based payroll service specifically designed for small to medium NZ based businesses with as few as one employee up to several hundred and were the first XERO Add-on Partner.
iPayroll is easy to use and will save you time and money.
As New Zealand's largest IRD listed online PAYE Intermediary they process upwards of $3.5 billion of customers payrolls every year.
•Simple 4 step process
•Manages leave, nett payments and PAYE, ir-filing for you.
•Employee Payslip Kiosk with leave requests
•Free ongoing use of help desk
A real plus is that by being a client of Accounted4 means you receive Special Discounted pricing. FREE TRIAL. www.ipayroll.co.nz or contact us for more information.
