That is two-and-a-half times more than UK Prime Minister David Cameron will be paid.
Justice Lowell Goddard has been charged with the inquiry, which was ordered by the British government following revelations that well-known BBC presenter the late Jimmy Savile was one of the UK's worst paedophiles, and subsequent allegations of an establishment cover-up of a child sex gang centred on Parliament in the 1980s.
The inquiry, which Justice Goddard officially opened last week, will look at whether public bodies failed to protect the youngsters.
Thousands of victims are expected to speak out against institutions and individuals in what will be Britain's largest ever public inquiry.
The leading New Zealand High Court judge and former chair of the Independent Police Conduct Authority, recruited as inquiry chair after two previous appointees resigned over apparent links to the Establishment, will be paid a salary of 360,000 British pounds (NZ$833,000) a year, the Daily Mail reports.
She will also have a rental allowance of £110,000 (NZ$254,000) a year and a £12,000 (NZ$27,000) utility allowance on top.
The Daily Mail also reports the UK Home Office will fund four business class return flights for 66-year-old Justice Goddard and her husband to return to New Zealand, plus a further two return flights for family members. She'll also get a car and driver for official travel.
It's expected the judge will receive around NZ$5.7m in pay and allowances over the course of the inquiry, which is due to run for the next five years.
"We welcome the fact that Justice Goddard is leading the inquiry's important work and grasping this once-in-a-generation opportunity to get to the truth," a Home Office spokesman said.
"Justice Goddard has a high level of relevant experience and expertise and as she said herself last week - this is the most ambitious public inquiry ever established in England and Wales."
Opening the inquiry, Justice Goddard said that while her task ahead was daunting, it could expose past failures of institutions to defend children.
The sexual abuse of children had left "permanent scars not only on successive generations, has left permanent scars not only on victims themselves, but on society as a whole", she said.
"This inquiry provides a unique opportunity to expose past failures of institutions to protect children, to confront those responsible, to uncover systemic failures ... and to make recommendations that will help prevent the sexual abuse and exploitation of children in the future."
Justice Goddard also issued a stark warning to individuals and institutions that they will face scrutiny "no matter how apparently powerful" and it would use sweeping powers to publicly identify those who had avoided justice for vile crimes.
"We must travel from the corridors of power in Westminster to children's homes in the poorest parts of the country, to hospitals, GP surgeries, schools, churches and charities," she said.
"We must put difficult questions to politicians, bishops and other faith leaders, head teachers, police officers, regulators, inspectors, and public officials of all kinds. And we will carry on putting those questions until we get the answers."
Putting her pay in perspective
Justice Goddard's pay deal tops the UK public sector pay league table.
She will earn more than the most senior judge in England and Wales and two-and-a-half times more than UK Prime Minister David Cameron.
Sir John Chilcot, chair of the inquiry into the Iraq war, who is yet to publish his report after six years, was paid a day rate of £790 ($NZ1830) - equating to £205,400 (NZ$476,211) a year.
Sir Brian Leveson, who chaired the inquiry into phone hacking and the ethics and culture of the UK media. took his normal £197,000 (NZ$456,736) judge's annual salary.
Justice Goddard received $285,400 in remuneration for her role as IPCA chair in 2011, and $225,026 in 2012.
She is also a retired senior High Court judge. As of December 2013, High Court judges in New Zealand are paid between $395,000 and $408,000.
It compares favourably with High Court judges in the UK who, as of April this year, received £177,988 (NZ$412,547).
