Payroll: Special types of workers
Special types of workers
Casual agricultural workers
Casual agricultural workers are people who are engaged in casual seasonal agricultural work:
- on a day-to-day basis
- 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. SeeTaxing 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 IR 330 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
- calculate PAYE using the current PAYE calculator.
Contract and relief milkers
Contract milkers
If you take on a contract milker you need to have a written contract in place. You need to ensure that the contract meets the criteria for a milker 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.
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)
- calculate PAYE.
Maximum deductions per week
| Reimbursing allowance for | Maximum to be deducted |
|---|---|
| Dog |
|
| Horse and saddlery |
|
| Horse only |
|
| Saddlery only |
|
| 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 who are paid at an hourly or daily rate are employees.
What to do
- 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
- paid annually - this should be treated as a lump sum bonus >
| Note | |
|---|---|
| Share-fishers fall under schedular payment (formerly withholding tax) requirements. See Taxing activities called schedular payments >. If you are unsure if you're hiring a share fisher or an employee, see Who is an employee or contractor > |
|
IR56 taxpayers
Examples of IR56 taxpayers:
- private domestic workers, such as home-helpers, attendant caregivers, nannies, gardeners and domestic odd-jobbers
- embassy staff
- New Zealand-based representatives of overseas companies
- Operation Deep Freeze personnel.
| Note | |
|---|---|
Private domestic workers are people who:
|
|
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
- register as an IR56 taxpayer, you can do this online under Get it done online>
- 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)
- deduct tax using the current PAYE calculator.
Casually-hired musicians
Musicians hired on a casual basis are usually paid schedular payments (formerly withholding payments).
What to do
- Every performer in a band must fill in a Tax code declaration (IR330) using a WT tax code.
- You tax at the WT rate, see Taxing activities called schedular payments >
- 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 330 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). | |
Deductions from door charges at hotels and taverns
Tax is not deducted 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.
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.
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 schoolchildren
Primary or secondary schoolchildren can earn up to $2,340 a year ($45 a week) before PAYE, using either the tax tables or schedular payment rates (formerly withholding payments), needs to be deducted.
Weekly earnings of less than $45
Schoolchildren who earn less than $45 a week, or who expect to earn less than $2,340 a year from all employers do not have to complete a Tax code declaration (IR330).
You don't need to deduct PAYE from payments you make to them or include them on your Employer monthly schedule (IR348). However, you still have to keep wage records for them.
Weekly earnings of more than $45
Schoolchildren who earn more than $45 a week, or expect to earn more than $2,340 a year from all employers need to complete a Tax code declaration (IR330). You need to deduct PAYE using either the tax tables or schedular payment rates (formerly withholding payments) from the payments you make to them and keep wage records.
Tax credit for children (formerly child rebate)
From 1 April 2009 children are entitled to a tax credit of $292.50 each year if their income is over $2,340 and they have had PAYE tax This has reduced from $321.75 for the previous year due to lower tax rates from 1 April 2009 onwards. If they use the M tax code on their IR330 you can reduce the PAYE tax by $5.62 each week, this way they receive their tax credit throughout the year. Schoolchildren under the age of 19 should not use the ML tax code.
| 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
- Employees: complete a Tax code declaration (IR330) with the tax code NSW
- Employers: deduct tax using the current PAYE calculator.
Shareholder-employees in close companies
If you employ shareholder-employees, deduct PAYE from:
- regular salaries for pay periods of one month or less
- 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.
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 and are taxed using the (WT) code rate unless they hold a current Certificate of exemption (IR331).
- If a contractor or employee has a Special tax code or deduction rate (IR23) certificate, deduct tax at the rate specified.
- If you don't get an IR23 or Tax code declaration (IR330), or the IR330 is not fully completed, deduct tax at the no notification rate.
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 code declaration (IR330) and deduct WT from the payment.
- You pay the wages of the contractor's employees. In this case treat them as if you were employing them directly.
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 NZ 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.
Date published: 24 Mar 2009
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