Payroll is the one bill that can’t slip. Your people are relying on being paid on payday, and the deductions you take from their wages aren’t yours to use. When cash is tight, getting this order of priorities right protects your staff, your reputation and your business.
This guide covers the key New Zealand employer obligations and some practical ways to protect payroll. It’s general information — for your specific situation, talk to your accountant or an employment adviser.
What makes up “payroll”?
Each pay run has several parts:
- Net wages paid to employees.
- PAYE deducted from gross wages.
- KiwiSaver — employee deductions plus employer contributions, and ESCT (employer superannuation contribution tax) on employer contributions.
- Student loan and child support deductions, where they apply.
- Holiday pay as leave is taken, and in final pays.
Only the net wages go to staff. Everything else goes to Inland Revenue.
Payday filing: what and when
Under payday filing, you file employment information with Inland Revenue every time you pay staff — generally within two working days of payday if you file electronically. Most payroll software does this automatically.
When are deductions paid?
According to Inland Revenue:
| Employer size | How often | Due |
|---|---|---|
| Small to medium — PAYE and ESCT under $500,000 a year | Monthly | By the 20th of the following month |
| Large — PAYE and ESCT over $500,000 a year | Twice monthly | Wages paid 1st–15th: by the 20th of the same month. Wages paid 16th–end: by the 5th of the following month (15 January for late December) |
Why deductions come first
Employer deductions are money you’ve withheld from employees’ pay. Inland Revenue treats non-payment seriously, and specific late payment penalty rules apply to employment information and deductions that are heavier than for most other taxes. Letting PAYE slide to cover other bills is one of the most expensive ways to “borrow”.
Unpaid deductions can also create personal exposure for company directors in some circumstances — another reason to keep them current.
Build payroll into your cash flow
Most payroll crunches are visible weeks in advance if you look. In your cash flow forecast:
- Mark every payday.
- Mark the deductions due date — the 20th for most small employers.
- Mark GST and provisional tax dates. Our GST and provisional tax guide lists them.
- Watch for months where three pays fall on fortnightly or weekly cycles, and for holiday periods when leave payouts spike.
Keep deductions separate
A simple habit that prevents most PAYE problems: every payday, move the total deductions for that pay run into a separate account. When the 20th arrives, the money is already there.
Practical ways to protect payroll
Speed up what’s owed to you. Invoice immediately, shorten terms, chase on day one. Our answer on covering payroll while customers pay late has more.
Line up a buffer before you need it. A business line of credit sized to your turnover can be drawn in the days before payday and repaid when invoices are paid. See whether you need a line of credit.
Use short-term funding for a specific gap. A short-term unsecured loan — usually for businesses trading 6+ months, with decisions sometimes same day — can cover a one-off crunch.
Deal with arrears properly. If PAYE is already behind, talk to Inland Revenue. A property-secured business loan can refinance or pay out IRD debt, including employer deductions, and stop penalties building.
Talk to your team early if hours need to change. Any changes to hours or pay must follow employment law and the employment agreement. Get proper advice before making changes — Employment New Zealand has guidance for employers.
Holiday pay and final pays
Two payroll costs catch employers out:
- Annual leave over summer, when many staff take leave at once and revenue may dip.
- Final pays when someone leaves, including any outstanding holiday pay.
Include both in your forecast.
A checklist for the week before a tight payday
If you can see a short pay run coming, work through this list early in the week:
- Confirm the exact total — net wages, deductions due, and any leave or final pays in this cycle.
- Chase every overdue invoice by phone, not just email. Ask for part-payment if the full amount isn’t possible.
- Check what’s due out before payday — supplier direct debits, loan repayments, rent — and whether any can be moved by a few days with the supplier’s agreement.
- Contact Inland Revenue if the deductions payment on the 20th is at risk, before it’s due.
- Ring a lending specialist early. A line of credit or short-term loan is far easier to arrange on Monday than on payday morning.
- Keep records of what you’ve done and agreed, in case you need to explain it later.
When payroll problems signal something bigger
If payroll is short every month and getting worse, the business may be spending more than it earns. Funding can bridge timing gaps; it can’t fix a structural shortfall. Talk to your accountant about the underlying numbers, and be honest with yourself about the trend.
Get help before payday, not after
If a pay run is at risk, ring the Hotline as early as you can. A specialist will tell you the fastest realistic option for your situation. Or request a call back.
Ready when you are. Ring 09 875 4577 or request a call back — a lending specialist will talk it through.