Question:
I have contacted IRD and Department of Labour, and was hoping to get some advice from a third party.
I’m taxing pilot bonuses and am trying to identify if it’s regular or irregular. My understanding is it gets taxed differently depending on the result.
The bonus is for completing 1st year of service and is discretionary depending on Company performance. IRD believes it is irregular as it happens only once in the Tax year. Department of Labour offered no advice.
I have 30 pilots to tax and I’d appreciate if you could offer your thoughts.
My only other question about these rates is if the employee has student loan, is the SL deduction on top of the flat rate, and if so is there a website that would explain the Student Loan component.
Answer:
Yes this would be a special bonus so the lump sum rates apply (there are 4 rates as of the 1 April 2010). DOL does not know anything about tax.
Look at this link for the new rates, your payroll system should have these: http://www.ird.govt.nz/payroll-employers/make-deductions/staff-benefits/bonuses/emp-ded-bonus-lump-sum.html
There is reference to SL on the same page but yes that would need to be taken out of the bonus as well.