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Employer responsibilities
Ngā kaiwhakawhiwhi mahi takohanga

Special types of workers

We explain what you need to do for the following types of workers
Casual agricultural workers Commission agents and salespeople
Contract and relief milkers Contractors receiving payments under certain labour hire arrangements
Directors Drovers and musterers
Election day workers Fishers
Foreign fishing workers IR56 taxpayers
Labour-only contractors in the building industry Musicians
Owners in a look-through company (LTC) Partners in a business partnership
People receiving voluntary schedular payments Piece-workers and outworkers
Primary and secondary school children Recognised seasonal workers
Shareholder-employees in close companies Shearers, shed-hands and shearing contractors
Subsidised workers Workers engaged in "activity in the community" projects

Casual agricultural workers

Casual agricultural workers are people who are engaged in casual seasonal agricultural work:

  • on a day-to-day basis, and
  • for up to three months.

They are taxed through the PAYE system at a flat rate.

What to do

  • Have your employee complete a Tax code declaration (IR330), their tax code will be CAE.
  • Deduct tax using the current PAYE calculator.
Note  
Agricultural contractors fall under schedular payment (formerly withholding tax) requirements.
See Taxing activities called schedular payments.

Commission agents and salespeople

Tax deductions from the income of commission agents and salespeople depend on whether they receive income from commissions only, or from both salary and commission.

Agents on commission only

Agents who receive commissions only must be taxed on the gross commission as a schedular payment. See Taxing activities called schedular payments.

Agents receiving both salary and commission

Some agents get a salary or other fixed remuneration plus commission from the same employer. Whether you deduct PAYE using the tax tables or the schedule rates listed on the back of the IR330C, or a rate chosen by the agent (subject to minimums), depends on whether the agent is an employee or self-employed.

If an agent is an employee:

  • add the gross commission to their gross wage for the period in which it was paid, and
  • calculate PAYE using the current PAYE calculator.

Contract and relief milkers

Contract milkers

If you take on a contract milker you need to make sure they meet the criteria to be self-employed.

Relief milkers

A relief milker is generally an employee and therefore you must deduct PAYE from their wages.

What to do

  • Have your employee complete a Tax code declaration (IR330), their tax code will be CAE.
  • Deduct tax using the current PAYE calculator.

Contractors receiving payments under certain labour hire arrangements

If one of the main activities of your business is:

  • arranging for a person(s) to perform work or services for your clients or the client of another person, and
  • you make a payment for work or services provided direct for your client or the client of another person

the payment is a schedular payment, whether made to a company or an individual - see Taxing activities called schedular payments.


Directors

Fees paid to directors are generally a schedular payment, see Taxing activities called schedular payments.

Some directors who are shareholder-employees of the company may pay provisional tax.


Drovers and musterers

For employees doing occasional droving and mustering work, calculate their PAYE using the current PAYE calculator.

If employees supply their own dogs, horses or saddlery and receive allowances:

  • deduct the amount of allowances paid (up to the maximum listed in the table below), and
  • calculate PAYE.

Maximum deductions per week

Reimbursing allowance for Maximum to be deducted
Dog
$1 for each dog supplied, maximum $4
Horse and saddlery
$1.50
Horse only
$1.00
Saddlery only
$0.50


 

Note  
Droving contractors fall under tax on schedular payment requirements.
See Taxing activities called schedular payments.

Election day workers

Election day workers are people employed on a casual basis immediately before, on, or after polling day. They are taxed through the PAYE system at a flat rate.

What to do

  • Have your employee complete a Tax code declaration (IR330), their tax code will be EDW.
  • Deduct tax using the current PAYE calculator.

Fishers

Fishers may be employees or self-employed contractors depending on the terms of their contracts. If you are unsure if a fisher is an employee, see Who is an employee or contractor.

What to do

If a fisher is an employee:

  • have your employee complete a Tax code declaration (IR330)
  • deduct tax using the current PAYE calculator
  • if they receive a share of the profits:
    • with their regular wages - these should be treated as a regular bonus and included in their gross earnings, or
    • paid annually - this should be treated as a lump sum bonus.

Fishers who are self-employed and provide their services under an arrangement or agreement for profit sharing fall under the schedular payment requirements. See Taxing activities called schedular payments.


Foreign fishing workers

Foreign fishing workers are workers who hold a work visa as foreign crew of a vessel fishing New Zealand waters. They are non-residents for New Zealand tax purposes, but have to pay New Zealand tax on their New Zealand income (income paid to a worker while fishing in New Zealand waters).

These workers are taxed through the PAYE system using the NSW tax code and at a flat rate. They may also have to make deductions for child support payments. However, foreign fishing workers won't have student loan deductions or be eligible to join KiwiSaver.

What to do


IR56 taxpayers

Examples of IR56 taxpayers:

  • Private domestic workers who work part-time, such as home-helpers, caregivers, nannies, gardeners and domestic odd-jobbers.
  • Embassy staff.
  • New Zealand-based representatives of overseas companies.
  • United States Antarctic program personnel.
Note  

Private domestic workers are people who:

  • work in someone else's home
  • do work for their employer that is not related to the employer's business
  • are paid directly by their employer, and
  • work no more than 30 hours per week on average for each employer.

You're not an IR56 taxpayer if you provide an ACC client with attendant care, child care, home help, or attendant care related to travel or training for independence.

ACC will pay you and deduct the tax from these payments before they are made.

If you are an IR56 taxpayer:

  • your employer is not required to deduct PAYE from your earnings
  • you are not self-employed
  • you are responsible for paying your own PAYE
  • you must register as an IR56 taxpayer, you can do this online under "Get it done online", and
  • you need to complete and send in Employer deductions (IR345) and Employer monthly schedule (IR348) forms with your payments each month.

Labour-only contractors in the building industry

Where workers in the building industry are under labour-only contracts, payments made to them for the following activities are taxed at schedular payment rates.

  • Erecting, extending, protecting, decorating, repairing or renewing buildings, other constructions, prefabricated or pre-cut buildings.
  • Working as a carpenter under a building contract (excluding employees - their earnings are liable for PAYE).
  • Laying concrete, bricks, blocks, tiles, slabs or stones of any description.
  • Fixing roofs or fences.
  • Hanging wallpaper, other decorative wall coverings or furnishings.
  • Painting, decorating or plastering.
  • Installing any fibrous plaster, wallboard, insulating material, interior tiles, carpets, linoleum or other floor coverings.

Musicians

If bands, orchestras or other entertainers are actual employees:

  • have each employee complete a Tax code declaration (IR330), and
  • deduct tax using the current PAYE calculator.

Casually-hired musicians

Musicians hired on a casual basis are usually paid schedular payments.

What to do

  • Every performer in a band must fill in a Tax rate notification for contractors (IR330C) which has the WT tax code.
  • You tax at the standard rate listed on page 3 of the IR330C or the rate chosen by the performer.
  • Some bands may have a Certificate of exemption (IR331), in which case the band leader will be responsible for deducting PAYE, using either tax tables or the schedular payment rate listed on the back of the IR 330C from musicians involved in the band.
Note  
If the band is registered as a partnership, the IRD number of the partnership will appear on the Tax code declaration (IR330) or the Tax rate notification for contractors (IR330C).

Deductions from door charges at hotels and taverns

Tax is not deducted by the hotel or tavern from door charges where a band member collects them accompanied by a hotel employee who is performing the licensing responsibilities of the licensee or manager (for example, allows or restricts entry).

However, if the band member is not accompanied by a hotel employee, tax at the schedular payment rate must be deducted from the door charges by the hotel or tavern.

Find out more about deducting withholding tax from hotel and tavern door charges


Owners in a look-through company (LTC)

An owner can be a working owner of an LTC if:

  • the working owner is employed under an employment contract
  • the working owner carries out their employment duties under that employment contract, and
  • the LTC's main activity isn’t investing money, or holding and dealing in shares, securities, investments, estates or interest in land.

Payments to a working owner are treated as salary or wages. The LTC has to deduct PAYE and meet their employer obligations for that working owner the same as with an ordinary employee.

A working owner isn’t required to be automatically enrolled in KiwiSaver.


Partners in a business partnership

A partnership (except an investment partnership) may make payments to a working partner for services personally performed. These payments are treated as salary or wages if all of the following conditions apply.

  • The partner is employed under a binding written contract of service, signed by all the partners.
  • The contract states the amount payable to the working partner for the services.
  • The working partner personally and actively performs the services for the partnership.

These services may be of any kind needed for the partnership's business.

A working partner isn't automatically enrolled in KiwiSaver.


People receiving voluntary schedular payments

A contractor who otherwise wouldn't be required to have tax deducted from their payments are able to opt to have tax deducted. They must discuss this with you first and if you agree you must have this agreement in writing. These payments will be schedular payments.


Piece-workers and outworkers

Deduct PAYE as usual when you make a payment that is:

  • for piece-work or based on output, and
  • solely for personal services.

If you don't pay salary or wages regularly, average the taxable earnings over the number of weeks in the working period. Treat any odd days as an extra week. Calculate the PAYE for each week separately and add up the PAYE to arrive at the total amount to deduct.


Primary and secondary school children

You will be required by law to start deducting PAYE from the school child’s salary/wages or schedular payments.

This means that you will need to provide the child with a Tax Code Declaration form (IR330). If the child does not return a fully completed IR330, the no-notification rate will apply.

If the child is receiving schedular payments instead of salary or wages they will need to complete a Tax rate notification for contractors (IR330C) instead of the IR330.

Note  
If you employ university, polytechnic or any other type of student, they must complete a Tax code declaration (IR330) and you must deduct PAYE, either using current PAYE calculator or the rates of tax for schedular payments, from payments made to them.

Recognised seasonal workers

Recognised seasonal workers are employed by employers registered under the Department of Labour Recognised Seasonal Employers scheme.

Recognised seasonal workers are non-resident for New Zealand tax purposes but are to pay New Zealand tax on New Zealand income. Their tax code is NSW. Income is taxed at a flat rate which includes ACC levies following PAYE processes.

What to do


Shareholder-employees in close companies

If you employ shareholder-employees, deduct PAYE from:

  • regular salaries for pay periods of one month or less, and
  • other payments that we consider liable for PAYE.

Do not deduct PAYE from irregular salary payments made to a shareholder-employee.

Include all shareholder-employee salaries where PAY has not been deducted in the Income tax return companies (IR4).


Shearers, shed-hands and shearing contractors

Below are the different tax deductions you would make for shearers, shed-hands and shearing contractors.

Note  
The CAE tax code only applies when the shearer or shearing shed-hand is employed on a day-to-day basis for up to three months.

What to do

  • Shearers and shearing shed-hands have PAYE deducted at a flat rate and use the tax code CAE.
  • Shearing contractors receive schedular payments, have the WT tax code and are taxed using the standard rate on the back of the IR330C or a rate chosen by them (subject to minimums), unless they hold a current Certificate of exemption (IR331).
  • If a contractor has a special tax rate certificate or an employee has a special tax code certificate, deduct tax at the rate specified.
  • If an employee has a student loan special deduction rate certificate, deduct the student loan amount at the rate and for the period specified on the certificate.
  • If you don't get one of the following, you should deduct tax at the no-notification rate:
    • special tax code certificate,
    • special tax rate certificate, or
    • a completed Tax code declaration (IR330) (employee) or a completed Tax rate notification for contractors (IR330C).

Combined farming and shearing

  • If you employ a shearer who does ordinary farm work, include any wages for this work with their shearing wages.
  • If a farm worker employed for farm work also does shearing work at shearers' rates of pay, treat the shearing wages as part of their normal pay for that pay period. Calculate PAYE using their normal tax code. Do not use the CAE tax rate
  • If a farmer does part-time shearing for another farmer, a Tax code declaration (IR330) should be completed and PAYE deducted at shearers' rates using the CAE tax code.

Shearing contractors

You may come across the following situations if you have shearing contractors and shearing gangs working for you.

  • The contractor pays the shearing gang. If the contractor has a current Certificate of exemption (IR331), pay the full contract price. If not, get the contractor to complete a Tax rate notification (IR330C) and deduct tax at the standard rate listed on the back of the IR330C or the rate chosen by the contractor (subject to minimums) from the payment.
  • You pay the wages of the contractor's employees. In this case treat them as if you were employing them directly.
  • If the contractor, or their employees, will be employed on a day-to-day basis for a period of up to three months the CAE tax code should be used.

Allowances

Travelling allowances and hand-piece allowances are non-taxable. All other types of allowances, including the value of free meals and board, are taxable. Add the value of these allowances to wages. Show any tax-free allowances paid in your wage records.


Subsidised workers

If you employ someone who has been unemployed for a certain time, Work and Income may subsidise that person's wages.

What to do

  • Have your employee complete a Tax code declaration (IR330).
  • Deduct tax using the current PAYE calculator.
  • Make tax deductions from the gross wage, not the gross wage less the subsidy.
  • Keep a record of the grants or subsidies received and how you have used them.

GST and subsidised workers

If you are registered for GST, you should be aware of your GST obligations regarding subsidised worker grants:

  • the wages subsidy you receive is GST-inclusive
  • you must enter the GST component in your GST return
  • you cannot claim GST on the wages you pay out to subsidised employees.

Find out more on subsidised employment from the Department of Work and Income under the "Related websites" section of our site.


Workers engaged in "activity in the community" projects

As an employer, you may sponsor someone who chooses to participate in a recognised community activity while receiving a benefit. Participants are entitled to an allowance in addition to their income support.

What to do

  • As a sponsor, you pay the weekly allowance to the participant.
  • You claim this back from Work and Income every four weeks.
  • You do not need to make any deductions from the allowance.
  • The allowance is not subject to GST or income tax.

Find out more on "activity in the community" projects from the Department of Work and Income under the "Related websites" section of our site.