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myIR, payments and more

Understanding schedular payments

Schedular payments are payments made to contractors who perform certain activities. These payments are required to have tax deducted but they’re different to salary or wage payments.

Who can receive schedular payments

It's not only individuals who receive schedular payments. Those that can receive them include:

  • self-employed contractors
  • sole traders
  • partnerships
  • trusts
  • companies operating in the agricultural, horticultural and viticultural industries, and
  • companies paid under labour hire arrangement in the industry.

The person or entity making the schedular payments is often referred to as the "payer".

Non-residents

Non-resident contractors and entertainers can also receive schedular payments.

Find out more about your obligations as a non-resident contractor or entertainer

Am I receiving schedular payments?

You’ll be receiving schedular payments if you’re doing work described on page 3 of the Tax rate notification for contractors IR330C.

You can find a more detailed description of the types of schedular payments outlined in Schedular 4 of the Income Tax Act 2007.

How is tax deducted from my payments

You must provide a completed IR330C to your payer. This will tell them the rate of tax to deduct from your payments.

The only time you don't have to provide an IR330C is if you have a certificate of exemption.

Find out more about completing a Tax rate notification for contractors IR330C

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Changing tax rates                                                      

If your circumstances change you can choose a new tax rate by completing the IR330C and giving it to your payer.

You can only choose a new tax rate twice within a 12 month period with the same payer. If you need to change your rate more than twice in a 12 month period you will need the agreement of your payer.

Example of changing tax rates

On 3 March 2018, Caroline starts work as a building contractor for Small Builders Ltd. Payments from Small Builders to Caroline are subject to the schedular payment rules so Caroline initially provides an IR330C to Small Builders advising a tax rate of 15% is to apply.

On 4 April 2018, Caroline wishes to change her rate and provides Small Builders with a new IR330C advising a rate of 20% is to apply. Caroline does not require the consent of Small Builders to do this change as she has only chosen a rate once within the last 12 months. However, if Caroline wishes to make any further changes to her rate used for payments received by Small Builders until 3 March 2019, she will require the agreement of Small Builders.

On 5 August 2018, Caroline starts work for Large Builders Ltd. Caroline can choose a new tax rate to apply to these payments without the consent of Large Builders as she has not previously chosen a rate with Large Builders.

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Deducting tax if you don't receive schedular payments

You can request to have tax deducted from the payments made to you if you're a contractor (including a company) and the payments you're receiving aren't already:

  • salary or wages, or
  • schedular payments.

To do this, the person paying you must agree to treat your payments as voluntary schedular payments and you must both agree to this in writing.

If an agreement is entered into, your payments will be treated as schedular payments and your payer will be required to deduct tax from payments made to you.

It's recommended the written agreement include:

  • your name and the name of your payer
  • an agreement that all payments made to you will be treated as voluntary schedular payments
  • the period this applies to, and
  • the signature of both you and your payer.

The agreement can be in the form of a memo, letter, formal contract or emails.

Income tax returns

Generally, you must file an income tax return at the end of the tax year if you receive schedular payments.

You may be able to claim expenses against your income when you file your return. You'll need to attach a Financial statement summary (IR10) or a copy of your financial records that shows your total income and expenses.

Find out more about claiming business expenses

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Student loan, KiwiSaver and ACC levies

Your payer isn't responsible for making these deductions from your schedular payments.

If your total income is over the annual repayment threshold, you'll need to make repayments towards your student loan. If you want to make payments towards your KiwiSaver, you'll need to arrange this with your scheme provider.

You'll receive an invoice for your ACC levies directly from ACC.