Published: 9 October 2026 | General information for New Zealand employers and business owners
PAYE compliance New Zealand is a critical responsibility for employers, including small businesses, construction companies and businesses that hire employees or contractors. A recent Inland Revenue (IRD) case highlights the serious consequences that can follow when inaccurate wage information leads to incorrect PAYE returns.
In a media release dated 6 October 2026, Inland Revenue reported that Mele Terepo was sentenced to 11 months of home detention for aiding and abetting tax evasion. The case involved Wingshead Property Developments Limited, a labour-hire business serving construction projects.
IRD reported that the company’s PAYE and withholding-tax shortfall exceeded NZ$606,000. Of 163 PAYE returns filed during the period investigated, only 15 accurately reflected the actual wages paid.
For New Zealand employers, the case is a reminder that payroll compliance involves more than submitting returns. Employers need accurate wage records, reliable payroll processes and appropriate checks to ensure the information provided to IRD reflects what employees were actually paid.
DFK Orb360 O’Halloran supports businesses with accounting, tax and business advisory services. This guide explains the case, key employer responsibilities and practical steps businesses can take to strengthen payroll compliance.
What happened in the recent IRD PAYE case?
According to Inland Revenue, Mele Terepo established Wingshead Property Developments Limited in May 2018 to provide labour-hire services for construction projects. Other family members worked for the business and were responsible for construction operations.
Terepo had a corporate background in administrative and managerial roles. Her responsibilities included company record-keeping and paying wages.
IRD began investigating PAYE filing for the period from October 2020 to March 2023 in July 2024. The company’s bank statements showed that the PAYE and withholding tax reported was substantially less than it should have been.
IRD reported that Terepo knowingly supplied false, inaccurate or misleading wage information to the company’s accountant. This resulted in PAYE returns that did not accurately reflect the wages paid. The company entered liquidation in May 2023.
Terepo pleaded guilty to one representative charge and was sentenced to 11 months of home detention at Manukau District Court on 5 October 2026.
Read the original Inland Revenue media release: Aiding and abetting tax evasion.
What is PAYE in New Zealand?
PAYE stands for Pay As You Earn. It is the system through which employers deduct income tax from employees’ salary or wages and account for those deductions through Inland Revenue.
Employers may also need to account for other deductions, such as student loan repayments and KiwiSaver contributions, where applicable. The requirements depend on the employee’s circumstances and the relevant rules.
PAYE reporting should reflect actual payroll activity. Employers need to maintain accurate wage information, make the required deductions, file employment information and pay amounts to IRD by the applicable deadlines.
Strong PAYE compliance in New Zealand helps employers meet their obligations, maintain reliable financial records and reduce the risk of reporting discrepancies.
Why is PAYE compliance important for employers?
PAYE deductions are not simply an ordinary business expense. They are amounts withheld or deducted in accordance with tax requirements and must be handled correctly.
Inaccurate payroll information can lead to incorrect employment information being filed with IRD. Failure to meet employer obligations may result in tax debt, interest, penalties or, in serious cases involving deliberate conduct, prosecution.
The case also illustrates that accountability may extend beyond the business itself. A person who knowingly assists tax evasion can face criminal consequences even if they are not the company’s owner.
Not every payroll error amounts to tax evasion. An honest mistake should be distinguished from deliberately providing false information. Businesses should investigate discrepancies and obtain advice about the appropriate way to correct them.
5 PAYE compliance lessons for New Zealand businesses
1. Make sure payroll records reflect actual wages
Payroll information should match what employees were actually paid. Keep clear records of hours worked, salary or wages, deductions, leave payments and bank payments.
Reconcile payroll reports with bank transactions and accounting records regularly. If the figures do not match, investigate the discrepancy before submitting employment information to IRD.
2. Provide your accountant with complete and accurate information
Accountants rely on information supplied by the business to prepare returns and financial reports. If payroll figures are incomplete or incorrect, the resulting filings may also be inaccurate.
Provide your accountant with current payroll reports, wage records, relevant employee information and details of any adjustments. Never knowingly provide misleading figures or leave out information that is necessary for accurate reporting.
3. Understand your employer tax obligations
Employers need to understand which deductions apply to their workforce, when employment information must be filed and when payments are due.
Set up a payroll calendar, assign responsibility for checking returns and ensure someone monitors deadlines. If your business hires more staff or changes its payroll arrangements, review whether your current systems remain suitable.
4. Introduce checks before filing PAYE returns
A consistent review process can help identify discrepancies before information is submitted. Depending on the size of your business, checks may include:
- Comparing payroll reports with bank payments.
- Reviewing employee and contractor payment records.
- Checking deductions and taxable wage amounts.
- Reconciling payroll accounts in your accounting software.
- Reviewing unusual adjustments before filing.
- Keeping records of corrections and approvals.
Where practical, separate the person preparing payroll from the person reviewing it. Smaller businesses can still introduce a second-person review or regular accountant check.
5. Address discrepancies promptly
If you discover that payroll information or a PAYE return may be incorrect, gather the supporting records and identify the affected periods.
Seek professional advice about how to correct the information, meet outstanding obligations and respond to any relevant IRD correspondence. Avoid ignoring the issue or making unsupported adjustments to financial records.
What should an employer do if PAYE returns are incorrect?
If your business discovers a potential PAYE reporting issue, take a structured approach:
- Identify the affected period: establish which pay runs, employment information filings or payments may be incorrect.
- Gather payroll records: collect wage reports, bank statements, employee information and accounting records.
- Reconcile the figures: compare actual payments and deductions with the information reported to IRD.
- Seek professional advice: discuss the circumstances with an accountant or tax adviser.
- Confirm the correction process: determine how to correct any inaccurate information and address outstanding amounts.
- Strengthen payroll controls: introduce checks to reduce the likelihood of repeat errors.
The appropriate response depends on the facts and the relevant tax rules. Where deliberate conduct or a potentially serious tax issue is involved, obtain suitable professional advice promptly.
How can an accountant help with PAYE compliance?
An accountant can help employers understand their reporting responsibilities and improve the systems used to maintain financial records. Depending on the services required, support may include:
- Reviewing payroll-related accounting records and reconciliations.
- Helping identify inconsistencies between payroll reports and financial statements.
- Supporting tax compliance processes and filing preparation.
- Reviewing accounting controls and record-keeping procedures.
- Helping organise supporting documentation for IRD enquiries.
- Providing broader accounting and business advisory support.
The right level of support depends on the business’s size, payroll arrangements and circumstances. An accountant can help clarify what assistance is appropriate and whether specialist payroll or tax advice is also needed.
Looking for an accountant in Auckland or Wellington?
DFK Orb360 O’Halloran provides accounting, tax and business advisory services to businesses in Auckland, the Wellington region and across New Zealand through remote support.
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Address: Level 2, 6 Kingdon Street, Newmarket, Auckland.
Businesses looking for accounting and tax support in central Auckland can contact our team to discuss their requirements.
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Address: 1D/43 Omega Street, Rosedale, Auckland 0632.
Our Rosedale office provides a point of contact for businesses across Auckland’s North Shore seeking accounting, tax and business advisory support.
Petone office — Lower Hutt, Wellington region
Address: 48 Richmond Street, Petone, Lower Hutt.
Businesses in Lower Hutt and the wider Wellington region can contact our team to discuss their accounting and tax requirements.
Whether you need an accountant in Auckland, accounting support in Wellington or help reviewing your business’s financial processes elsewhere in New Zealand, our team can discuss your needs.
Visit our DFK Orb360 office locations page or call 09 377 4238.
Speak to DFK Orb360 O’Halloran about your payroll and tax compliance
Are you confident that your payroll records, PAYE reporting and accounting processes are accurate? If you are unsure whether your business’s systems are meeting its obligations, it may be time to review them.
DFK Orb360 O’Halloran can discuss your accounting and tax requirements and help you understand what support may be appropriate for your business. Our team can talk through your concerns, identify the type of assistance you may need and discuss the next steps.
Request a consultation using the form below. Tell us about your business and the support you are looking for, and our team can follow up with you.
Frequently Asked Questions About PAYE Compliance New Zealand
What is PAYE compliance in New Zealand?
PAYE compliance involves meeting employer obligations for deducting the required amounts from employees’ salary or wages, maintaining accurate payroll records, filing employment information and paying amounts to Inland Revenue within the applicable timeframes.
What happened in the recent IRD aiding and abetting case?
IRD reported that Mele Terepo was sentenced to 11 months of home detention for aiding and abetting tax evasion. The case involved inaccurate wage information supplied to a company accountant, resulting in incorrect PAYE returns. IRD reported a PAYE and withholding-tax shortfall exceeding NZ$606,000.
Can an employee or administrator be held responsible for tax evasion?
Yes. Depending on the circumstances, a person who knowingly assists another person or business to commit a tax offence may face criminal consequences. Responsibility is not necessarily limited to a company’s owner or director.
What happens if an employer files incorrect PAYE returns?
The appropriate response depends on the circumstances. Employers should review the affected records, identify the discrepancies and seek advice about correcting the information. Serious or deliberate non-compliance may lead to penalties or prosecution.
How can a business improve its payroll compliance?
Maintain complete wage records, reconcile payroll with bank payments, review deductions, check employment information before filing and monitor payment deadlines. A regular review by an appropriately qualified professional may also help identify gaps.
Can an accountant help with PAYE and payroll records?
An accountant can help review accounting records, identify inconsistencies, improve financial controls and explain relevant tax reporting obligations. The scope of support depends on the business’s circumstances and whether specialist payroll advice is required.
Where are DFK Orb360 O’Halloran’s offices located?
DFK Orb360 O’Halloran has offices in Newmarket and Rosedale in Auckland, and Petone in Lower Hutt for the Wellington region. Remote support is also available to businesses across New Zealand. Visit the office locations page for details.
Key Takeaways on PAYE Compliance New Zealand
The recent IRD case highlights why accurate payroll information, reliable records and appropriate checks are essential for employers. PAYE compliance is not simply an administrative task; it is part of meeting your business’s tax responsibilities.
If you have questions about payroll reporting, accounting controls or your business’s tax obligations, contact DFK Orb360 O’Halloran to discuss the support you may need.
Disclaimer: This article provides general information only and is not legal, tax or accounting advice. It summarises a public Inland Revenue media release and does not assess any individual business’s circumstances. Seek professional advice based on your situation.
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