Nanny Payroll NZ: PAYE, IR56, KiwiSaver and Records

Before calculating PAYE, decide what the working relationship really is. The same person cannot be treated as an employee for some rights and casually called a contractor to avoid other obligations.

Regular in-home nanny care often has employee features because the household sets the location, recurring hours and duties and expects the nanny to perform the work personally. However, each arrangement needs to be tested under current New Zealand law. The statutory contractor gateway test has applied since 21 February 2026; if all of its criteria are not met, the common-law tests determine the true nature of the relationship.

Read Employment New Zealand’s current employee-or-contractor test and document the conclusion. The nanny contract guide explains how the status decision affects the written agreement.

IR56 is designed for certain workers who are employees but handle their own PAYE. Inland Revenue includes qualifying part-time nannies in the private domestic worker category.

All four conditions must apply

• The nanny works in the employer’s private home.
• The work is not related to a business operated by the employer.
• The employer pays the nanny directly.
• The nanny does not work more than 30 hours a week on average for each employer.

Hours are tested for each employer. Inland Revenue gives the example that a domestic worker can exceed 30 total hours across several households and still qualify when they do not exceed the threshold for any one employer. By contrast, if the nanny works more than 30 hours on average for one household, that household is responsible for PAYE under the current guide.

An eligible nanny registers as an IR56 worker, calculates their own PAYE and other applicable deductions, files employment information and pays Inland Revenue. Current IRD guidance says monthly employment information is due within 10 working days after the end of the month in which payment was received, and payment is due by the 20th of the following month. Confirm those dates rather than relying on a saved checklist. See IRD’s private domestic worker criteria and IR56 obligations.

If the nanny is an employee and does not qualify for IR56, the household generally takes on the normal employer payroll role. More than 30 average weekly hours for one household is an important trigger, but other facts can also prevent IR56 eligibility.

1. 1

   Confirm worker status

   Decide whether the real relationship is employment or genuine contracting under current New Zealand tests. Do not use tax convenience to choose the label.
2. 2

   Test the IR56 conditions

   If the nanny is an employee, check whether every private-domestic-worker condition is met. Record the answer, especially average weekly hours for this household.
3. 3

   Set up the correct payer

   Either the eligible nanny registers and follows IR56, or the household registers as an employer and runs PAYE. A genuine contractor invoices and manages business tax.
4. 4

   Connect the employment agreement

   Configure gross pay, guaranteed hours, pay cycle, leave, public holidays, additional hours, reimbursements and authorised deductions from the signed agreement.
5. 5

   Run and review every pay

   Approve hours, calculate gross-to-net pay, file on time, make payments, update leave and preserve detailed records. Recheck the setup whenever hours or status change.

Typical employer setup tasks

• Register as an employer with Inland Revenue before required deductions and filings begin.
• Collect the employee’s IRD number, tax-code declaration and relevant KiwiSaver information securely.
• Configure the employee’s gross rate, pay cycle, ordinary hours and lawful deductions.
• Track actual days and hours, including additional hours and public-holiday work.
• Calculate gross pay, PAYE and other deductions using current rates or compliant NZ payroll software.
• Pay net wages and agreed reimbursements to the correct bank account.
• File employment information and pay employer deductions by the current deadlines.
• Update leave balances and retain the underlying records.

For electronic payday filing, Inland Revenue currently requires employment information within two working days of each payday. Check IRD’s payday filing page because deadlines and processes can change.

Start with the gross wage in the signed agreement. Gross pay is not the amount the nanny receives after deductions, and reimbursements for genuine work expenses should not be confused with wages.

Do not compare platform fees with nanny wages

NannyOra membership or booking charges are separate from the nanny’s gross pay and household employment costs. Review current NannyOra platform pricing independently, then build a total childcare budget that includes wages, leave, payroll support, KiwiSaver or ACC obligations where applicable, mileage, activities and backup care.

Payroll must reflect employment rights and the nanny’s actual work pattern. Part-time and IR56 status do not erase employee entitlements.

• Record when annual-holiday entitlement dates arise and what leave is taken and paid.
• Track sick leave and other statutory leave where eligibility requirements are met.
• Identify otherwise working days before calculating public-holiday entitlements.
• Record hours worked on a public holiday and any alternative-holiday balance.
• Use the correct holiday-pay calculation for variable or changing hours.
• Update payroll when guaranteed hours, regular days or the employment type changes.

These obligations depend on the worker and payroll route, and rates change. Use current official calculators rather than copying a percentage from an old article.

KiwiSaver

A household running employer payroll needs to check whether a new employee is already a KiwiSaver member, whether automatic enrolment applies, what deductions are required and whether compulsory employer contributions apply. Inland Revenue’s KiwiSaver for employers page contains the current process and rates.

Private domestic IR56 workers use a different joining and reporting pathway. IRD says they opt in directly with a provider and include applicable KiwiSaver amounts with their IR56 employment information. Use the dedicated IR56 KiwiSaver guidance for the current responsibilities of both parties.

ACC

PAYE commonly includes the ACC earners’ levy, while employer or private domestic worker circumstances can also produce ACC Work levy responsibilities. The payer, classification and amounts depend on the arrangement. Review ACC’s levy guidance for employers and private domestic workers or ask ACC to confirm the correct account treatment.

Good records are the evidence that the nanny was paid and received leave correctly. A bank transfer alone does not show which hours, deductions or entitlements produced the amount.

• Each day worked and the actual number of hours worked that day.
• Ordinary, additional, overnight, travel and public-holiday hours as applicable.
• Gross wages for each pay period and how they were calculated.
• PAYE, KiwiSaver, student loan, child support and any other deduction or contribution.
• Reimbursements, mileage, allowances and the supporting approval or receipt.
• Annual holidays, sick leave, other leave and alternative-holiday balances and payments.
• Employment agreement, variations, tax forms and relevant KiwiSaver notices.
• Filed employment information and proof of payments to the nanny, IRD or providers.

Employment New Zealand says wage and time, holiday and leave records must be kept for six years, even after the employee leaves. Tax and KiwiSaver records may need to be kept for seven years. Read the official record-keeping requirements and design your system for all applicable retention periods.

Use this operational sequence for each pay period, adapting the filing steps to IR56 or household-employer payroll.

• Approve the nanny’s daily hours and resolve any discrepancy before calculation.
• Add paid leave, public-holiday treatment, allowances and approved additional hours.
• Separate genuine expense reimbursements from gross wages.
• Calculate current PAYE and other deductions using the correct tax code and official rules.
• Calculate any applicable KiwiSaver employer contribution or other employer amount.
• Pay gross wages for IR56 or net wages for employer-run payroll, as the correct route requires.
• Provide a clear pay breakdown and update leave balances.
• File employment information and pay deductions by the applicable deadline.
• Store the timesheet, calculation, payment and filing evidence securely.
• Reassess status if hours, payer, location or the nature of the working relationship changes.