In this article we look at the taxation of holiday pay.
We quote from the IRD Payroll News as shown on the left.
In this IRD example an employee is taking three of their four weeks annual leave.
Whenever a payment of holiday pay is made in Ace Payroll, the following dialog is shown immediately afterwards
Due to increasing marginal tax rates, tax on holiday pay reduces if apportioned over a number of weeks.
If the holiday spans part of a week, use the next greatest full week. In other words for a holiday of 2 weeks and 1 day, use 3 weeks.
If after having selected a number of weeks as shown above, you then need to go back and change the value, this is done from the PAYE Deduction Analysis dialog. It is fully documented in an associated FAQ.
Payment For Sick Leave If Taken On A Public Holiday
You are not required to pay your staff time and a half if they call in sick on a public holiday they would have otherwise worked more..