First of all let’s sort out ‘What the heck is PAYE?’ This is pretty simple. It’s TAX. The acronym PAYE stands for ‘Pay As You Earn’ and everyone has to pay tax on the money they earn.

While this is a bit different for the Self Employed an Employee (be they earning from wages or a salary) is required to pay their tax as they get paid – and this responsibility (to whip the tax out of each Employees pay packet and pay it directly to the government) falls to their Employer to manage. Sounds easy, but . . .


. . . it can get a little complicated when the government (via the IRD) make up all sorts of rules (which they then keep on changing) that force Employers to calculate and manage all manner of regulations, entitlements and deductions along with the extraction of an employees (correctly calculated) PAYE tax. 

So that is where a PAYE Intermediary comes in. A PAYE Intermediary is essentially a ‘go-between’ who will protect an Employer from getting their PAYE obligations wrong – and save them from copping a nasty fine from the IRD. 

And the fines for Employers can be pretty harsh – with little room for negotiation. You can be fined for filing your return late, making a late payment on that return, failing to deduct PAYE (even if you just calculate it wrong), failing to make the right deductions (for things like superannuation contribution tax, student loans, child support and Kiwisaver, etc) and more. It can get a little scary. No Employer wants to end up being audited just because they miscalculated something on a PAYE return…

So that is why an Employer may choose to use a PAYE Intermediary who then becomes responsible for fulfilling the Employer’s PAYE obligations. Once you appoint an Intermediary they act on your behalf for all of your companies PAYE responsibilities. 
They ensure the calculations are correct. They ensure the filing and payments are on time. And they deal directly with the IRD to discuss anything that needs sorting out. You get on with running your business.

If you’re an Employer it’s possible that right now your accountant or bookkeeper is managing your PAYE obligations for you. They’re most likely doing a damn fine job, however they are unlikely to actually be a PAYE Intermediary. Mainly because there are literally thousands of accountants and bookkeepers in New Zealand but there are only 16 PAYE Intermediaries accredited by the IRD (and the list does not include the likes of MYOB or Ace Payroll who are just software developers).

The big differences here are the depth of understanding of PAYE and payroll calculations (an Intermediary is a dedicated specialist in this dark art) and the closeness of the PAYE Intermediaries relationship with the IRD (an Intermediary has a direct line in to speak with actual people. Others do not). And an Intermediary will have developed some form of comprehensive software program to simplify the management of PAYE and all the other regulations and possible deductions. Like Crystal Payroll’s online payroll system.

So if you find your obligations to the IRD are leaving you with too little time to get the important stuff done at work (or worse, giving you sleepless nights) try handing over your PAYE problems to an Intermediary (like Crystal Payroll) and letting them lake that load off your mind. And, best of all, if you are an Employer with 5 or less Employees – you will get the help you need from Crystal Payroll for FREE.

Read our related Post:  Do online payroll systems deduct PAYE too early?