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Deducting an IRD Debt from an Employees Pay

When IRD advises you to make debt deductions from an employee's salary or wages, here is how to enter this in Thankyou Payroll. 

Updated: May 2026

If you receive a letter or notice in your MyIR account advising you to start making debt deductions from an employee's salary or wages you can enter this into the Thankyou Payroll system.

Info - Blue Block (1)The deductions will run until the amount has been fully paid , or IRD advises you in a letter to stop making the deductions. Follow this link to see how to stop making this deduction if so advised by IRD.


Below is an example of a letter from IRD advising the employer to start making deductions from an employee's pay:

IRD Deduction Notice (1)

Information to Note:

  • The total amount owed stated in the letter is the amount loaded in the timesheet (as shown below). No further calculations are needed.
  • This is a last resort to get a debt paid so only make changes when request by IRD.
  • The reference number given in the letter is for deposits made directly from your bank. By doing though payroll the payment is linked to the employee's IRD number, so the reference number is needed.

Entering IRD Debt on a Timesheet

IRD debt needs to be loaded into an active timesheet. Let's look at some options for doing this:

  • If you already have a pay on your dashboard you can use this and add the entry to their timesheet, or
  • create a new pay and add the employee to that pay. 

Pro Tip - Blue BlockPro Tip: You can enter this row in an empty timesheet with no 'standard pay row' added to it just to enter the deduction into the payroll system. Deductions will start from the employee's next pay.

 

On the employee's timesheet.

IRD Debt Included

  1. Add a row by clicking on the green + sign.
  2. From the entry dropdown menu, select IRD debt (+) as the pay type.
  3. Enter the full amount owed in any of the the boxes in that row. 
  4. Update and Save the timesheet.
  5. Now you will see a new row added to the Pay Summary for IRD Debt. 
    1. This row (number 5) will show the amount deducted from this pay as well as the remaining balance to be paid in brackets. NOTE: This balance is the total less the amount deducted in this timesheet.

Info - Blue Block (1)Please Note: You only have to add this to a single timesheet. The payroll system will automatically deduct the correct amount from future timesheets. You don't have to do anything further.

 

Here is an example of a later timesheet for this same employee:

IRD Debt next pay

  1. Note that the IRD debt (+) row is not included. DO NOT add it again.
  2. The IRD debt summary is displayed in the Pay Summary as the deduction is automatically included in the pay.

Info - Blue Block (1)This IRD debt pay summary line (2) will display in EVERY timesheet for this employee until the debt is repaid, or the deduction is stopped.

 

Did you know? The system will automatically calculate the amount to deduct, it will not deduct the full amount unless this amount is small.