Payroll Giving enables employees to make regular donations to a charity directly from their pay. The employee will receive an immediate tax credit on the donated amount, which will reduce the amount of PAYE tax deducted from their pay.
For more information about the Payroll Giving scheme, refer to the IRD website.
To set up Payroll Giving the steps are as follows:
Create a new Pay Item under Manage > Pay Items > Deductions using the Donation type. You'll need one pay item for each donee organisation, and you'll set all relevant bank account details on each.
You can now add the donation pay item into the employee's default pay settings:
The next time a pay is created that includes that employee, the new donation pay item will be included and the Donations Tax Credit pay item will be automatically added to the pay.
A donee organisation is a charity or organisation that is able to receive donations from an employee's pay.
A donee organisation must have Inland Revenue donee status. Anyone on the IRD approved list is eligible to receive payroll giving donations.
Payroll Giving Tax Credit
Tax credits for payroll donations are calculated when a donation is made using Payroll Giving and gives immediate tax relief as a reduction in the employee's PAYE.
The amount of the tax credit for payroll donations is 33.33 cents for each dollar donation.