Some contractors can apply for a certificate of exemption. These contractors pay their own tax instead of having the tax deducted from each schedular payment.
Certificates of exemption can only be used for schedular payments. They cannot be used for salary or wages.
Who can apply for a certificate of exemption?
New Zealand tax residents can apply for a certificate of exemption if they:
- are in business
- have a good record of filing tax returns and paying tax
- get schedular payments from a payer other than a labour hire business under a labour hire arrangement.
If you're a New Zealand tax resident and you get schedular payments from a labour hire business under a labour hire arrangement, you'll need to apply for a 0% special tax rate instead.
If you're a non-resident contractor and you get schedular payments from a labour hire business under a labour hire arrangement, you can apply for a certificate of exemption.
Renewing a certificate of exemption
Contractors need to renew their certificate of exemption every tax year. We send a renewal notice in January or February so the contractor has time to renew their certificate before the new tax year starts on 1 April.