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Payroll & Tax in New Zealand

New Zealand payroll & taxation

There are specific rules for payroll and taxation in New Zealand, depending upon whether your company employs foreign nationals or local New Zealand employees.  A state-operated social welfare system provides benefits during sickness, unemployment, disability and retirement and is funded by general taxation.

The primary concerns for a foreign company that needs to comply with tax laws in New Zealand are: individual income tax (IIT) for employees in New Zealand, social security costs, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.

Your Payroll Options in New Zealand

Remote Payroll

A remote payroll in New Zealand is where a foreign company, i.e. a non-resident company, payrolls a resident employee in New Zealand. This applies to both local and foreign employees. The foreign company will need to register a branch, apply for an IRD and then register as an employer with the Inland Revenue. One option for a non-resident company to payroll its employees (local and foreign) in New Zealand is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in New Zealand under one of the forms available, (Branch Office, Limited Liability Company, or Limited Partnership) but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to New Zealand may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a New Zealand payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with New Zealand employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in New Zealand to a GEO, like Shield GEO. This is possible for both foreign workers and New Zealand nationals. This is the easiest, fastest and safest way to payroll staff in New Zealand.

Shield GEO manages all aspects of payroll for workers in New Zealand, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in New Zealand

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