Small Business Tax Dictionary

Pay As You Earn (PAYE) is a withholding tax system in New Zealand where employers deduct income tax and other deductions directly from employees' wages or salaries. PAYE ensures that tax is collected gradually throughout the year, making it more manageable for individuals. Employers must comply with PAYE regulations by calculating the correct withholding amounts, reporting to the tax authorities, and remitting the withheld funds. Understanding and managing PAYE is essential for New Zealand businesses, ensuring timely and accurate tax collection, supporting employee financial management, and maintaining legal compliance.