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Deducting and Paying Employee IRD Arrears

Published 01 Sep 2014

If your Employee asks you to deduct a higher amount, you can do so. However, the Employee can't reduce the amounts deducted, or cancel the deduction notice - they need to contact the IRD directly with any concerns.

The tax arrears deductions don't get entered on your Employer monthly schedule (IR348) or Employer deductions (IR345) form. They must be paid separately from the payment you make for PAYE and other deductions.

This is different to a "Student loan compulsory extra deduction notice" where the deductions are entered on your EMS/IR348 and EDF/IR345. The student loan notice will explain how to show these deductions correctly.

How to pay the deductions to IRD?

You must pay each amount deducted to the IRD when they're deducted.

You can pay the deductions by:

  • your bank's tax payment service (if it has one)
  • online banking
  • credit or debit card through the IRD website
  • cheque - please include the payment slip attached to the deduction notice (photocopies of the payment slip can be used).

When making the payment, please include the reference details shown on the notice so the IRD knows what the payment is for.

When to stop the deductions?

If your Employee shows you a tax receipt or advises you they've paid off the amount, don't stop making the deductions.

Please continue making the deductions until:

  • you receive a notice from the IRD asking you to stop, or
  • you have no further funds payable to the employee, or
  • the total amount owing on the notice has been paid.

Source IRD.