Setting up a special tax code for an employee

1. Go to the Maintenance command centre and click Maintain Employees.
2. Click Select Employee.
3. Click the applicable employee then click OK.
4. Click the Employment Details tab.
5. In the Tax Code field, select STC as shown below.
6. In the newly appeared Tax Rate field, enter the applicable tax rate for this Special Tax Code (STC) as advised by the IRD. See our example below.
   
   
   

   

   If the rate advised by the IRD includes the Accident Compensation (ACC) levy, deduct the ACC levy before entering the Tax Rate.

   Check the IRD website for the latest ACC levy rate

   Example

   If the advised rate is 20% and this includes the ACC levy, enter the Tax Rate as 20% minus the ACC levy. So with an ACC levy of 1.39%, you'd enter 18.61%.

   Payroll will automatically add the required ACC levy to the employee's tax to bring the total back to the required 20%.

7. Continue processing your employee's pay as normal.

Due to the ACC levy automatically adding to the rate entered for the Special Tax Code (STC), if the STC rate advised by the IRD is 0%, you'll need to enter the current ACC levy rate as the STC rate. For example, with an ACC levy of 1.39%, you'd enter -1.39% (0% minus 1.39% ACC levy).

An STC of 0% will result in no tax (PAYE) being deducted.

You'll be able to continue processing your employee's pay in the normal way.