As a general rule, employers are obligated to calculate and withhold PAYE income tax from an employee's earnings, along with (where relevant) student loan repayments and child support payments, and, finally, KiwiSaver deductions. It should be noted that whilst employees are also subject to contributions in respect of the Accident Compensation Corporation (ACC) levy, these are included in the PAYE income tax rates and do not require separate calculation.
2.1ÌýÌýÌýÌý Withholding of income tax
The purpose of Income Tax Act 2007 is to:
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•ÌýÌýÌýÌý define and impose tax on a net amount of income
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•ÌýÌýÌýÌý impose obligations concerning tax, and
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•ÌýÌýÌýÌý set out rules for calculating tax and for satisfying the obligations imposed
Where a person (employer) makes a PAYE income payment to an individual, they must withhold an amount from that payment under the PAYE rules, as defined in Sch 2 of the Act.
According to the preliminary provisions set out in Employment Relations Act 2000, Pt 2, s 5, an employer
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