Why did my employee get a tax bill?

All individuals in NZ get taxed the same via "marginal tax rates" - if the payroll system your employer uses short taxes you, you could end up with a tax bill at the end of the year! This shouldn’t happen most of the time.

Common reasons tax bills arise are:

• where you receive a bonus and not enough tax is deducted

• you receive a pay increase and the payroll system doesn't catch up on the tax that you owe (ie it's no good at predicting your total income for the year will be too high)

• you switch employers and have a higher income resulting in a higher tax bracket with your new employer

It's not the answer anyone ever loves, but sadly you do need to pay that tax. If it's a hefty sum, the IRD will allow payment arrangements over time for your tax bill, or your current employer could deduct a sum from your pay each pay period and pay it to the IRD on your behalf.

Not sure how to pay your tax bill to the IRD? Check out our blog post on how to pay the IRD! Employee tax bills would be paid to “Income Tax - INC”.

You can also check out our blog post on personal tax rates explained to make more sense of the above!