---
title: "PAYE on a redundancy or lump sum, by IRD's rate table"
method: POST
path: "/v1/lump-sum-tax"
tags: ["Calculators"]
---

# PAYE on a redundancy or lump sum, by IRD's rate table

`POST /v1/lump-sum-tax`

## Request

- Base URL: `https://api.calculate.co.nz`
- URL: `https://api.calculate.co.nz/v1/lump-sum-tax`
- Auth: API key in header `X-API-Key`

Tax on a redundancy, retirement payment, bonus or other extra pay.

This applies IRD's published lump sum rate TABLE: annualised income plus
the lump sum selects a single flat rate, and that rate is charged on the
whole payment. It is what an employer actually deducts on the day.

That makes it different from `/v1/bonus-tax`, which computes the same tax
the exact way, as tax on salary plus bonus minus tax on salary alone. Both
are right and they give different answers: the table is the deduction, the
exact method is roughly where the year-end assessment lands. Use this one to
check a redundancy letter or a payslip.

Two rules make redundancy different and both are easy to miss. Redundancy
and retirement payments carry no ACC earner levy, so they always take the
lower column whatever the income, and no KiwiSaver is deducted from them at
all. Treating a redundancy like a bonus overstates the deductions twice.
The levy also stops for any extra pay once the total passes the ACC liable
earnings cap, which is why the two columns converge at the top.

`why_that_rate` explains the row that was selected, and
`annualised_income` shows the one simplification: IRD grosses up the last
four weeks of pay, while this takes the annual salary given. They agree for
steady pay and part company after a month of heavy overtime or commission.

## Request body

- LumpSumTaxRequest
  - `lump_sum` number, required: The gross lump sum in NZD.
  - `annual_salary` number, required: Annual salary, used as the annualised income. This selects the rate, so the answer depends on it.
  - `payment_type` string: redundancy, retirement, bonus, commission, holiday_pay, exit_inducement or back_pay. Redundancy and retirement carry no ACC levy and take no KiwiSaver, which changes the answer.
  - `kiwisaver_rate` number: Employee contribution as a DECIMAL. Forced to zero for redundancy and retirement, because no KiwiSaver comes out of those.
  - `has_student_loan` boolean: Whether 12% is deducted from the lump sum.

## Response `200`

The flat rate selected, why, and what is left of the payment.

- LumpSumTaxResponse
  - `result` LumpSumTaxResult, required
    - `payment_type` string, required: The payment type used.
    - `lump_sum` number, required: Gross lump sum.
    - `annual_salary` number, required: Salary as given.
    - `annualised_income` number, required: The annualised income the rate was selected on. IRD grosses up the last four weeks; this uses the salary, which is the same for steady pay. Shown so the substitution is visible.
    - `total_for_rate` number, required: Annualised income plus the lump sum.
    - `bracket` string, required: The band that total falls in.
    - `paye_rate_percent` number, required: The single flat rate applied to the whole lump sum.
    - `excludes_acc_levy` boolean, required: True when the lower column applies: always for redundancy and retirement, and for anything once the total passes the ACC cap.
    - `why_that_rate` string, required: Why that row of the table was selected.
    - `paye` number, required: PAYE deducted from the lump sum.
    - `kiwisaver` number, required: KiwiSaver deducted. Always zero for redundancy.
    - `student_loan` number, required: Student loan deducted, 12% of the whole lump sum.
    - `total_deductions` number, required: Everything taken off.
    - `net_received` number, required: What actually arrives.
    - `effective_rate_percent` number, required: All deductions as a percentage of the lump sum.
    - `tax_year` string, required: Tax year the rate table is for.
  - `disclaimer` string, required: Scope and limits of this calculation.

## Other responses

- `422`: Validation Error

---

[API](https://skmtc.dev/calculate/apis/calculate-co-nz-api.md) · [All operations](https://skmtc.dev/calculate/apis/calculate-co-nz-api/llms.txt) · [OpenAPI document](https://skmtc.dev/calculate/apis/calculate-co-nz-api/revisions/aa59a8e76614?raw)