Tax arrears (NZ)

SmoothPay provides specific rules in the Agencies section to cater for all government deductions (including the special rules for Tax Arrears, Fines, WINZ repayments etc).

IRD issues poorly worded letters to employers without actually stating what the deduction is for, leading to considerable confusion such as:

  • only paying the amount deducted monthly (necessary only for manual payroll systems),
  • indicating it's in addition to Student Loan (when the employee doesn't have a Student Loan)

...0and it's not until you get to the details to appear on the IRD's bank statement that you see the three letters "ARR" - this indicates the amounts to be deducted are for Tax Arrears.

Now that we've established what the deduction is for we can apply the correct rules.

Create a Tax Arrears code in Agencies:

The payee bank account is set automatically to IRD's account (check if you like and change if you need to)

Now, add the new agency to the employee's Payments tab:


The payment will be adjusted to protect the employee's net pay (if necessary) and deductions will stop automatically when the amount has been paid off.

The amount deducted each pay period will appear in your direct credit schedule.


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