What You Need to Know About PAYE and Tax for Nannies in New Zealand

What Is PAYE (Pay As You Earn)?

PAYE stands for Pay As You Earn and is New Zealand’s system for collecting income tax directly from employee wages.

As the employer, it’s your job to:

• Deduct PAYE tax from your nanny’s gross pay each payday
• Deduct or contribute to KiwiSaver (if your nanny is enrolled)
• File payday information with Inland Revenue (IRD)
• Pay the tax and contributions to IRD on time

Each payday, you must calculate your nanny’s net pay after tax and deductions, then send the PAYE amount to IRD. You can learn more about employer responsibilities on the IRD website here.

Understanding Your Nanny’s Tax and Deductions

Your nanny’s total deductions depend on their individual circumstances, but generally include:

·         PAYE Tax – Employer Deducts

·         Kiwisaver – Employer/Employee Contributions

·         Board & Lodgings (if applicable) – Employer deducts

·         Student Loan (if applicable) – Employer deducts

It’s important to use the correct tax code, which your nanny provides on their IR330 form. Using the wrong code can cause over- or under-payments that must later be corrected with IRD.

Employer Obligations Beyond PAYE

As a nanny employer, your responsibilities don’t stop at tax deductions. You must also:

• Provide an employment agreement: Required by law for all employees. You can find templates on Employment New Zealand’s website.
• Record hours and pay: Maintain accurate records of hours worked, gross pay, deductions, and leave entitlements.
• Provide payslips: Each pay period should show gross pay, tax, KiwiSaver, and net pay.
• Pay holiday and sick leave correctly: Nannies are entitled to annual leave, public holidays, and sick leave under the Holidays Act 2003.
• Register as an employer with IRD: Before making your first payment, you must register as an employer to file PAYE returns. If you are using Pay The Nanny, you can ignore this step, we sort it all for you.

 What About KiwiSaver?

If your nanny is eligible for KiwiSaver, you must:

• Deduct the employee’s chosen contribution rate (usually 3%)
• Contribute a minimum of 3% as the employer
• Include KiwiSaver deductions in your regular PAYE filings

You can find official KiwiSaver employer details on IRD’s KiwiSaver employer page.

Why DIY Payroll Can Be Risky

Managing nanny payroll manually can lead to costly errors, paying in cash, from missed tax filings to incorrect leave calculations. A single misstep can trigger IRD penalties or underpaid entitlements.