EOFY: Your guide to end of financial year payroll for 2025

The end of financial year (EOFY) is an important time to be on top of all things payroll, and we know it can be a stressful time for Kiwi business owners. To help you feel confident with the upcoming payroll legislation changes and EOFY requirements, we’ve pulled together everything you need to know into one easy blog. 

This article will cover:

• An overview of changes to legislation

• Processing your final pay run

• Cashing up annual leave 

• Reports you might need 

• Updating and reviewing your payroll

• EOFY resolution

From 1 April 2025, the minimum wage will increase by $0.35 to $23.50 per hour, and the training and starting-out minimum wages will also increase to $18.80 per hour, keeping it at 80% of the adult minimum wage.

If you have employees who are affected by these changes, you will need to update their pay rates as part of your payroll process. If you’re using Smartly, it’s pretty straight-forward to update pay rates, and we’ll prompt you along the way if you forget.

What you need to do:

• Review your payroll and work out which people are on minimum wage or close to it. If you’re using Smartly, you could run the Employee Card report to help you with this.

• Make sure you update any pay rates impacted by the change before 1 April 2025. 

• For easy step-by-step instructions on how to update your employee pay rates, check out our help article.

The ACC earner levy rate will increase from $1.60 to $1.67 for every $100 of liable earnings from 1 April 2025. The maximum liable earnings threshold will also increase from $142,283 to $152,790 for the 2025/26 tax year, with the maximum levy payable becoming $2,551.59.

The minimum liable earnings that self-employed people pay Work and Earners' levies on will increase to $49,365.

Using Smartly? We will automatically update the ACC Earners’ Levy rates for you.

The Employer Superannuation Contribution Tax (ESCT) thresholds will increase from 1 April 2025 to the following:

Using Smartly? We will automatically update the Employer Superannuation Contribution Tax (ESCT) thresholds for you. 

From 1 April 2025, extra pays that are earned in the course of normal employment will be taxed on the tax thresholds introduced on 31 July 2024. 

Using Smartly? We'll automatically update the tax thresholds on extra pays from 1 April 2025.

Starting 1 April 2025, when processing extra pays that occur as a result of termination of employment, calculate the tax based on:   

• The amount of the extra pay, and 
• The annualised value of the PAYE income from the last two pay periods before the extra pay.

If the employee hasn’t been paid for at least two pay periods, they can notify their employer of their tax rate based on their expected taxable income for the year.

Using Smartly? We'll automatically update the tax calculation for extra pays upon termination from 1 April 2025 to keep you compliant. Plus, you'll have the option to manually specify the tax rate for employees who haven’t received two pay periods.

It’s simple, your final pay for the 2024/25 financial year is the same process as normal. It is the last pay run with a direct credit date on or before 31 March 2025. You can also use this final pay run to check your employees’ payslips and pay data is correct, as well as ensuring it’s in the right period for your reporting.

When using Smartly this is all sorted for you, and you can pull any reports as and when needed. Easy right?

The end of financial year is a common time for employees to cash up their annual leave.

Here’s a couple of things to remember:

• A maximum of one week of an employee’s four-week entitlement can be cashed out every 12 months of continuous employment. This can be done all at once, or through multiple requests to cash up until the entire week is cashed up.

• Cashing up annual leave needs to be requested by the employee in writing and agreed by both parties. As an employer, you do have the right to say no. Employment New Zealand has some useful information about cashing up annual leave. 

This report shows an employee’s data as a certificate of earnings that can be used at the end of the tax year. If you have an accountant, it’s likely they may ask you for this report.

We’ve got easy step-by-step instructions to help you get the year to date earning report in Smartly. 

This report shows all earned and taken leave, including any adjustments that have been made. The amount shown for annual leave paid in advance is based on the weeks value calculated at the time of the payment. This report is often used as part of the end of financial year reporting, and if you have an accountant, they may also ask you for this report.

We’ve got easy step-by-step instructions to help you get the 63-day holiday report report in Smartly.

For a full breakdown of all the different reports that are available in Smartly, check out our help article.

It’s a great time to do a general tidy up, so you can make sure your employee’s information is up-to-date for the new financial year.

Here’s a quick checklist you can follow to ensure everything is in order:

• Check the pay rates for all your employees

• Make sure their tax codes are correct 

• Check employee details, like their contact information and appointment information.  

• Check who has access to make changes within your payroll site

• Review who has the authority to view and approve your pay runs

• Check the Employer Superannuation Contribution Tax (ESCT) rate for each employee

If you’re using Smartly for your payroll, your employee’s ESCT rates are calculated automatically – easy! We do still recommend thoroughly checking the earnings that Smartly estimates for you, so you can be sure they appear correct based on what you know about your employee’s earnings. 

If you’re not using Smartly, you will need to verify the ESCT rate for each employee that will be used for the coming tax year. ESCT rates depend on the employee’s income and how long they have been working for you. Check out this page for more information about ESCT. 

It’s not always a straightforward situation so we suggest contacting Employment New Zealand on 0800 20 90 20 if you’re unsure about anything to do with your team. IRD are also there to help when it comes to any tax-related queries.

If you’re not using Smartly already, start the new financial year with automated, accurate and compliant payroll. We take care of the faffing so you can focus on what’s more important – running your business. 

What are you waiting for? We've got over 22,000 Kiwi businesses using Smartly and we'd love for you to join us.

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