The Parliamentary Counsel Office has made editorial and format changes to this version using the powers under subpart 2 of Part 3 of the Legislation Act 2019.

Note 4 at the end of this version provides a list of the amendments included in it.

These regulations are administered by the Inland Revenue Department.

These regulations are made under section 23N of the Tax Administration Act 1994—

(a)

on the advice and with the consent of the Executive Council; and

(b)

on the recommendation of the Minister of Revenue made after consultation undertaken in accordance with section 23N(3).

Regulations

1 Title

These regulations are the Tax Administration (Correction of Errors in Employment Income Information) Regulations 2019.

2 Commencement

These regulations come into force on 1 April 2019.

3 Interpretation

In these regulations, unless the context otherwise requires,—

ACC levy means an amount that must be deducted under section 221 of the Accident Compensation Act 2001

child support amount means an amount that must be deducted under Part 10 of the Child Support Act 1991

employee KiwiSaver contribution means a contribution that must be deducted under subpart 1 of Part 3 of the KiwiSaver Act 2006

employer has the same meaning as in section YA 1 of the Income Tax Act 2007 and includes a PAYE intermediary

employer KiwiSaver contribution means a contribution that must be paid to the Commissioner under subpart 3 or 3A of Part 3 of the KiwiSaver Act 2006

employment income information has the same meaning as in section 23C of the Tax Administration Act 1994

ESCT means an amount of tax that must be paid to the Commissioner under the ESCT rules (within the meaning of section YA 1 of the Income Tax Act 2007)

later payday includes a payday in a later tax year

overpayment means the payment of an amount to an employee by an employer where the amount is paid—

(a)

in error, to the extent to which the employee is not beneficially entitled to the amount; or

(b)

as an advance payment, to the extent to which the employee does not become beneficially entitled to the amount

PAYE income payment has the same meaning as in section RD 3 of the Income Tax Act 2007

student loan repayment means an amount that must be deducted under subpart 1 of Part 2 of the Student Loan Scheme Act 2011

tax—

(a)

means income tax; and

(b)

includes the following:

(i)

an ACC levy:

(ii)

a child support amount:

(iii)

an employee KiwiSaver contribution:

(iv)

a student loan repayment

unrepaid PAYE income overpayment has the same meaning as in section RD 8B(3) of the Income Tax Act 2007

withheld includes deducted.

Main provisions

4 Payroll overpayment errors

(1)

This regulation applies (subject to subclause (8)) if—

(a)

an employer makes an overpayment to an employee on a payday; and

(b)

the employer treats the overpayment as all or part of a PAYE income payment made to the employee on the payday; and

(c)

as a result, the employer’s employment income information for the payday does not correctly report 1 or more of the following:

(i)

the PAYE income payments that were actually made to the employee on the payday:

(ii)

the employer KiwiSaver contributions that the employer should have made in respect of those PAYE income payments:

(iii)

the ESCT payable on those contributions:

(iv)

the tax that the employer should have withheld in respect of the employee on the payday.

Example

Jai has a base salary of $900 gross a week but, for the last 4 paydays, has been paid a $100 weekly allowance that should have ceased at the end of the previous month.

The employment income information for paydays 1 to 4 reported gross income of $1,000 (including $100 of an extra payment made in error) and reported PAYE of $180 (including $29 in error).

This regulation applies (unless Jai’s employer reduces the amount paid to Jai on a later payday by the amount of the overpayment, for which see subclause (8)).

Position if employee repays or agrees to repay

(2)

To the extent that the amount is repaid by the employee to the employer, the employer must correct the error in the employment income information for the payday in one of the following ways:

(a)

by notifying the Commissioner in accordance with regulation 10:

(b)

by netting off the following, as relevant, in the employer’s employment income information for 1 or more later paydays:

(i)

the overpayment:

(ii)

any excess amount in the employer KiwiSaver contributions reported as made:

(iii)

any excess ESCT reported as payable:

(iv)

any excess tax reported as withheld.

Example

Jai repays the amount before the employer calculates Jai’s pay for payday 5.

The employer adjusts the employment income information for payday 5 to show gross income of $500 (ie, $900 − ($100 x 4)) and PAYE of $35 (ie, $151 – ($29 x 4)).

(3)

To the extent that the amount is repayable to the employer by the employee under an agreement between them, the employer must correct the error in the employment income information for the payday by treating the amount that is so repayable as repaid, and by complying with subclause (2) in respect of that amount.

Example

If Jai agrees to repay the amount over the next 4 paydays (paydays 5 to 8), Jai’s employer may choose—

to do the same as in the above example. In this case, Jai’s normal income is reported for paydays 6-8, even though he may be receiving less as he pays back the overpayment; or
to report the amounts being repaid on each payday. In this case, the employer adjusts the employment income information for paydays 5 to 8 to show gross income of $800 (ie, $900 − $100) and PAYE of $122 (ie, $151 – $29).

(4)

Subclauses (5) and (6) apply to the extent that an employer has corrected an error in accordance with subclause (3), but—

(a)

the employee breaches the agreement and does not remedy the breach within 2 months; or

(b)

the employer considers that the employee will not comply with the agreement in future.

Example

Jai repays the amount for the first 2 paydays (5 and 6), but then defaults on the agreement. He has repaid $200 of the overpayment.

If Jai’s employer had adjusted the employment income information for payday 5 to show gross income of $500 ($900 − ($100 x 4)) and PAYE of $35 ($151 – ($29 x 4), then the employer adjusts the employment income information for a later payday to show gross income of $1,100 (see the example for subclause (5)).

Position if no repayment or agreement to repay

(5)

To the extent that the amount is an unrepaid PAYE income overpayment, the employer must correct the error in the employment income information by making an upwards adjustment for the amount in the employment income information for a later payday.

Example

The employer adjusts the employment income information upwards for payday 5 to show gross income of $1,100 ($900 + $200) and PAYE of $209 ($151 + ($29 x 2)).

(6)

To the extent that the amount is not an unrepaid PAYE income overpayment, the employer must correct the error in the employment income information for the payday by notifying the Commissioner in accordance with regulation 10.

Other provisions

(7)

Unless allowed by the Commissioner, the option in subclause (2)(b) may not be used if that would result in a negative amount being included in the employment income information for the later payday.

(8)

This regulation does not apply if the employer, with the agreement of the employee and in accordance with any applicable law, reduces a PAYE income payment made to the employee on a later payday by the amount of the overpayment.

Example

Jai and the employer agree to reduce the gross amount paid to Jai on a subsequent payday via the payroll. Jai’s employer does not need to correct the employment income information. This is because the later payday with the decreased gross amount will be reported as normal and no correction will be needed.

(9)

Subclause (10) applies to the extent that an amount is either of the following:

(a)

an overpayment of a benefit or grant referred to in section RD 5(6)(a) to (c) of the Income Tax Act 2007:

(b)

an overpayment that is recoverable under section 248 of the Accident Compensation Act 2001.

(10)

The employer must correct the error in the employment income information for the payday in accordance with a method referred to in subclause (2)(a) or (b) unless the employer, with the agreement of the employee and in accordance with any applicable law, reduces a PAYE income payment made to the employee on a later payday by the amount of the overpayment.

Regulation 4(10): amended (with effect on 1 April 2019), on 30 March 2026, by section 252(2) of the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026 (2026 No 8).

5 Other incorrect calculations of PAYE income payments

(1)

This regulation applies (subject to subclause (4)) if—

(a)

an employer incorrectly calculates the PAYE income payments made to an employee on a payday; and

(b)

as a result, the employer’s employment income information for the payday does not correctly report 1 or more of the following:

(i)

the PAYE income payments that were actually made to the employee on the payday:

(ii)

the employer KiwiSaver contributions that the employer should have made in respect of those PAYE income payments:

(iii)

the ESCT payable on those contributions:

(iv)

the tax that the employer should have withheld in respect of the employee on the payday.

(2)

The employer must correct the error in the employment income information for the payday—

(a)

by notifying the Commissioner in accordance with regulation 10; or

(b)

by netting off the following in the employer’s employment income information for a later payday:

(i)

any excess amount in the PAYE income payments reported as made:

(ii)

any excess amount in the employer KiwiSaver contributions reported as made:

(iii)

any excess ESCT reported as payable:

(iv)

any excess tax reported as withheld; or

(c)

by including the following in the employer’s employment income information for a later payday:

(i)

any shortfall in the PAYE income payments reported as made:

(ii)

any shortfall in the employer KiwiSaver contributions reported as made:

(iii)

any shortfall in the ESCT reported as payable:

(iv)

any shortfall in the tax reported as withheld.

(3)

However,—

(a)

unless allowed by the Commissioner, the option in subclause (2)(b) may not be used if that would result in a negative amount being included in the employment income information for the later payday:

(b)

the option in subclause (2)(c) may be used only if—

(i)

there is a shortfall in the combined amount of income tax and ACC levy reported as withheld; and

(ii)

that shortfall is less than 10% of the combined amount of income tax and ACC levy that is withheld for the employee on the later payday on which the error is corrected, disregarding any amount that is attributable to the earlier payday and the correction of the error.

(4)

This regulation does not apply in the case of an overpayment. See regulation 4 instead.

6 Other errors relating to income tax or ACC levy

(1)

This regulation applies (subject to subclause (4)) if—

(a)

an employer incorrectly calculates the income tax or ACC levy to be withheld in respect of an employee on a payday; and

(b)

as a result, the employer’s employment income information for the payday does not correctly report the income tax or ACC levy that the employer should have withheld in respect of the employee on the payday.

(2)

The employer must correct the error in the employment income information for the payday—

(a)

by notifying the Commissioner in accordance with regulation 10; or

(b)

by netting off, in the employer’s employment income information for a later payday, any excess income tax or ACC levy reported as withheld; or

(c)

by including, in the employer’s employment income information for a later payday, any shortfall in the income tax or ACC levy reported as withheld.

(3)

However,—

(a)

unless allowed by the Commissioner, the option in subclause (2)(b) may not be used if that would result in a negative amount being included in the employment income information for the later payday:

(b)

the option in subclause (2)(c) may be used only if—

(i)

there is a shortfall in the combined amount of income tax and ACC levy reported as withheld; and

(ii)

(4)

This regulation does not apply—

(a)

if the incorrect calculation results from an incorrect calculation of PAYE income payments. See regulations 4 and 5 instead:

(b)

if there is an incorrect calculation of a child support amount, KiwiSaver contribution, or student loan repayment. See regulation 7 instead.

7 Other errors relating to child support, KiwiSaver, or student loans

(1)

This regulation applies (subject to subclause (4)) if—

(a)

an employer incorrectly calculates any of the following to be deducted in respect of an employee on a payday:

(i)

a child support amount:

(ii)

an employee KiwiSaver contribution:

(iii)

a student loan repayment; and

(b)

as a result, the employer’s employment income information for the payday does not correctly report what the employer should have deducted in respect of the employee on the payday for the item referred to in paragraph (a)(i), (ii), or (iii).

(2)

This regulation also applies (subject to subclause (4)) if—

(a)

an employer incorrectly calculates 1 or both of the following in respect of a payday:

(i)

the employer KiwiSaver contributions to be made by the employer in respect of an employee:

(ii)

the ESCT payable on those contributions; and

(b)

as a result, the employer’s employment income information for the payday does not correctly report 1 or both of the following in respect of the payday:

(i)

the employer KiwiSaver contributions that the employer should have made in respect of the employee:

(ii)

the ESCT payable on those contributions.

(3)

The employer must correct the error in the employment income information for the payday by notifying the Commissioner in accordance with regulation 10.

(4)

This regulation does not apply where the incorrect calculation results from an incorrect calculation of PAYE income payments. See regulations 4 and 5 instead.

8 Reporting errors

(1)

This regulation applies if any employer’s employment income information provided or delivered to the Commissioner includes an error that does not have to be corrected under regulations 4 to 7 (ignoring regulation 4(8)).

(2)

The employer must correct the error in the employment income information by notifying the Commissioner in accordance with regulation 10.

Example

On payday 1, Clara was paid a $500 discretionary bonus by cheque in addition to her regular pay of $3,000 a fortnight. The employer correctly calculated the PAYE income payment and tax on the extra pay was withheld and paid to Inland Revenue correctly. However, the employer forgot to include the bonus amount of $500 in the employment income information for Clara for that payday.

Regulation 5 does not apply because the employer correctly calculated the PAYE income payment and tax on the extra pay was withheld and paid to Inland Revenue correctly.

This regulation applies and Clara’s employer must notify Inland Revenue in accordance with regulation 10.

Supplementary provisions

9 Employer to correct error as soon as reasonably practicable

An error that must be corrected by an employer under these regulations must be corrected as soon as is reasonably practicable after the employer becomes aware of the error.

10 Notifying Commissioner of error in employment income information

(1)

This regulation applies if an employer is notifying the Commissioner of the correction of an error or multiple errors in any employment income information for a payday in accordance with regulation 4(2)(a), 4(6), 5(2)(a), 6(2)(a), 7(3), or 8(2).

(2)

Section 14C of the Tax Administration Act 1994 applies to the notification, and the employer must notify the Commissioner in a manner described in section 14C(2).

11 Errors in employee’s tax code

These regulations do not apply to an error in any employment income information for a payday to the extent that the error is attributable to a failure of the employee to comply with section 24C of the Tax Administration Act 1994 (which relates to notified tax codes).

Michael Webster,
Clerk of the Executive Council.

Issued under the authority of the Legislation Act 2019.

Date of notification in Gazette: 28 March 2019.

Notes

1 General

This is a consolidation of the Tax Administration (Correction of Errors in Employment Income Information) Regulations 2019 that incorporates the amendments made to the legislation so that it shows the law as at its stated date.

2 Legal status

A consolidation is taken to correctly state, as at its stated date, the law enacted or made by the legislation consolidated and by the amendments. This presumption applies unless the contrary is shown.

Section 78 of the Legislation Act 2019 provides that this consolidation, published as an electronic version, is an official version. A printed version of legislation that is produced directly from this official electronic version is also an official version.

3 Editorial and format changes

The Parliamentary Counsel Office makes editorial and format changes to consolidations using the powers under subpart 2 of Part 3 of the Legislation Act 2019. See also PCO editorial conventions for consolidations.

4 Amendments incorporated in this consolidation

Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026 (2026 No 8): section 252(2)

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