Numerous aspects of New Zealand’s payroll regulations make it different from those of other countries. When expanding your business to New Zealand, you’ll not only have to learn the various tax deductions but also additional laws for areas such as student loans and KiwiSaver deductions. If you miss a tax payment, you could face hefty fines.
Working with Globalization Partners — a global PEO and New Zealand payroll processing company — can simplify the entire payroll process. We’ll hire employees on your behalf and add them to our existing payroll. You’ll never have to worry about compliance or deciding on a New Zealand payroll option — you can focus on running your business while leaving these issues to us.
Payroll Taxation Laws
Income tax rates in New Zealand vary based on how much money your employee earns. It ranges from 10.5% to more than 30%. The Pay As You Earn (PAYE) system means employers do not have to worry about income taxes because they get deducted from your employees’ incomes automatically.
Employers do, however, need to consider the 28% corporation tax. New Zealand does not have a social security tax, but you must pay a 15% Goods and Services Tax (GST) on any goods and services sold in the country. New Zealand employers must also offer KiwiSaver — the country’s retirement savings program — to all employees.
New Zealand Payroll Options
You have four main New Zealand payroll options:
- Internal: Larger companies committed to keeping an active business presence in New Zealand may invest in setting up an internal payroll at their subsidiary’s office. This option is the most expensive since you’ll need to hire the necessary staff.
- Remote: If you only want one payroll, you can add your employees in New Zealand to your parent company’s payroll. However, you’ll need to keep in mind payroll regulations will differ between the two locations.
- New Zealand payroll processing company: If you do not want to set up your New Zealand payroll alone, you can work with a local company to outsource. However, you will still be liable for all compliance matters.
- Globalization Partners: For a convenient New Zealand payroll outsourcing solution, choose a global PEO such as Globalization Partners. We’ll add your employees to our payroll and lift the burden of compliance off your shoulders and onto ours.
How to Set up New Zealand Payroll
Once you decide what type of subsidiary you want to incorporate, you’ll need to set up your New Zealand payroll according to the country’s employment laws. Start by checking your company name and setting up an IRD number for general taxes. Then you’ll need to register for GST, open a corporate bank account, and obtain an accountant and lawyer. A legal representative for your company will need to be present when you set up your corporate bank account.
Necessary Entitlement and Termination Terms
It is best practice to establish entitlement and termination terms in a written employment contract before the employee’s first day. New Zealand does not have a statutory severance pay scheme, so employees are entitled to severance or redundancy pay only if their employment agreement outlines it.
New Zealand Payroll Processing Company
If you need help from a New Zealand payroll outsourcing company, contact Globalization Partners today to learn more about the services included in our comprehensive solution.