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myIR, payments and more

What are schedular payments?

Schedular payments are payments made to people who are not employees, but who are employed under a contract for service (self-employed / independent contractors).

The tax code for schedular payments is 'WT' and the payments are taxed at the standard rate for the activity or a rate otherwise chosen by the contractor subject to minimums. If the contractor:

  • is GST registered, they will supply you with a tax invoice and you should work out the tax on the GST exclusive amount
  • isn't registered for GST work out the tax on the full amount
  • does not supply a Tax rate notification for contractors (IR330C), the tax will be deducted at the no-notification rate of 45% unless they are a company that is a non-resident contractor where the rate is 20%.

You may need to treat these payments differently for example where:

  • a certificate of exemption is provided - no tax is deducted by the payer
  • a special tax rate certificate is provided - tax is deducted at the specified rate on the certificate
  • the contractor is a company - no tax is deducted by the payer

unless the company is:

  • working in the agricultural, horticultural and viticultural industries, or
  • a non-resident entertainer, or
  • a non-resident contractor, or
  • receiving payments made to it under a labour hire arrangement from a labour hire business.

Find out more about exemptions ›
Find out more about tax on schedular payments ›
View our Tax code notification for contractors (IR330C) form ›

How you deal with other payments

You may make payments or give allowances to employees. Some are taxable and some aren't.

  • Benefit allowances (taxable) examples include - accommodation, farm cottage or board.
  • Reimbursing allowances (not taxable) examples include - mileage allowance, tools.
  • Travel allowances (taxing depends on situation) examples - includes working outside normal hours of work, or outside normal place of work.
  • Wages to school children (depends on the circumstances) - primary and secondary students only.
  • Wages to spouse (taxable) - husband, wife, defacto or civil union partner.
  • Lump sum payments (taxable) examples include - bonuses, retiring or redundancy payments.
  • Holiday pay (taxable) examples include - holiday pay and pay for statutory holiday.

If you're a sole trader you can't pay yourself a wage - you take money from the business for personal use (these are called drawings).

Find out about special types of workers ›