How final pay and redundancy are taxed
Final wages, holiday pay and notice pay are taxed through PAYE. A redundancy compensation payment is typically treated as an 'extra pay' and PAYE is calculated using IRD's extra-pay rules, which can look like a high rate because it's calculated as though the payment were spread across the year. At the end of the tax year (31 March), IRD does a square-up: if too much was withheld, you get a refund; if not enough, you may owe.
Tax codes you'll meet
| Code | Used for | Notes |
|---|---|---|
| M | Main job income for most people | Use this on a main job, including part-time or casual. Does not include a student loan. |
| SB / S / SH / ST / SA | Second job tax codes, depending on income level | Use when you have a second job. S, SH, ST or SA depend on how much total income you expect. |
| M SL / SB SL etc. | Add 'SL' if you have a student loan | Your employer deducts repayments through PAYE. 'SL' code applies for NZ-based borrowers. |
| CAE, EDW, NSW, WT | Casual agricultural, election day workers, non-resident seasonal workers, schedular payments | Special situations only. |
Starting a new job: give your new employer your IRD number and tax code. If you work for two employers, one is the 'main job' (M) and the other uses a secondary code. Wrong code is the usual reason people get an unexpected tax bill. IRD has a tax code finder on ird.govt.nz.
Tax on your benefit and part-time work
- Work and Income benefits are taxable. The Jobseeker Support figures on this site (for example $372.55 a week for a single person aged 25 or over) are after tax at the main rate; the before-tax figure is $426.12.
- If you do part-time or casual work while on a benefit, it's taxed with your pay and also reduces your benefit. Tell Work and Income promptly.
- Contractors and self-employed income (including gig work) isn't taxed automatically; you pay provisional tax and a tax return; consider setting aside a percentage of every payment.
If you owe IRD and can't pay
- Don't ignore it: penalties and interest build. Ring Inland Revenue on 0800 227 773, or message them in myIR, before the due date.
- Ask for an instalment arrangement. They'll ask about your income, expenses, and what you can afford.
- Ask about financial hardship relief: IRD can, in serious cases, write off or reduce penalties and interest or, rarely, the tax itself. Include a short explanation and evidence (redundancy letter, benefit statement).
- Prioritise ongoing obligations (current tax, child support) alongside the arrears so the debt doesn't grow.
- If you have more than one debt, a MoneyTalks mentor can negotiate on your behalf.
Email / myIR message to IRD
I've been made redundant as of [date] and I can't pay the balance of [amount] by the due date of [date]. I'd like to set up an instalment arrangement of [amount] per [week/fortnight]. I'm receiving [Jobseeker Support / no income]. If you need further information to consider financial hardship relief on penalties and interest, please tell me what you need. Name, IRD number, phone.
End of tax year and tax credits
- Most salary and wage earners are automatically assessed. Check your myIR account in the weeks after 31 March for a refund or bill.
- Working for Families Tax Credits may be affected by lower income. The family tax credit amounts are $151.91 a week for the first child and $123.78 for each subsequent child (check current rates and update your income estimate with IRD).
- Keep records of anything you can claim: work-from-home expenses if self-employed, donations (receipts needed), and income from every source.
Sources
- Inland Revenue (opens in a new tab)
- Work and Income: Benefit rates April 2026 (opens in a new tab)
- Employment NZ: Final pay (opens in a new tab)
General information only. Confirm with the agency for your situation. Spotted something out of date? Email help@unemployed.nz.