Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

Payment from Holidays Act Remediation

If an underpayment for leave under the Holidays Act is to be paid it must be treated for tax as an extra pay.

Income Tax Act 2007 RD 7 Extra pay Remedial payments for certain entitlements

(3) A remedial payment made about 1 or more of a person’s entitlements under the Holidays Act 2003, an employment agreement, or both, is treated as an extra pay if — (a) the payment is made to a person in connection with their employment; and (b) but for this subsection, the payment would be a payment of salary or wages or an extra pay, or a combination of both; and (c) the payment is made to the person to meet all or part of a shortfall in 1 or more previous payments to the person who has an entitlement under the Holidays Act 2003, or an employment agreement, or both.

© New Zealand Payroll Practitioners Association, Mar 2026, Ver 9

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