Payroll (New Zealand): Entering Annualised Income for Extra Payments When Employment Ends

Inland Revenue (IR) have changed how employers must calculate the marginal tax rate when an employee receives an extra payment as part of a termination payment.

From 1 April 2025, you must calculate the employee's annualised income by identifying what they've earned over the last two paid pay periods before their termination payment. Previously, annualised income was based on payments from the last four weeks.

To help keep you compliant with the new rule, we've added a new Annualised Income field on the Employee's Current Pay form (MP.PP.31.30). This field is only available if there's an active termination batch in the employee's current pay. After entering the annualised income you've calculated and saving your changes, MYOB Acumatica — Payroll does the rest of the calculations to ensure the extra payment is calculated and taxed correctly.

Note:

You have to manually calculate the annualised income. We plan to make this an automatic calculation in a future release. When you do the calculation, the Pay History (MP.PP.41.20) and Pay Activity Summary Data (MP.PP.40.61) reports are useful for finding an employee's prior pays.

For more information about compliance changes for the 2025–2026 tax year, see our guide in the online knowledge base.