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|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 are people who are engaged in casual seasonal agricultural work:
They are taxed through the PAYE system at a flat rate.
|Agricultural contractors fall under schedular payment (formerly withholding tax) requirements.
See Taxing activities called schedular payments.
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 who receive commissions only must be taxed on the gross commission as a schedular payment. See Taxing activities called schedular payments.
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:
If you take on a contract milker you need to make sure they meet the criteria to be self-employed.
A relief milker is generally an employee and therefore you must deduct PAYE from their wages.
If one of the main activities of your business is:
the payment is a schedular payment, whether made to a company or an individual - see Taxing activities called schedular payments.
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.
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:
|Reimbursing allowance for||Maximum to be deducted|
|Horse and saddlery||
|Droving contractors fall under tax on schedular payment requirements.
See Taxing activities called schedular payments.
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.
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.
If a fisher is an employee:
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 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.
Private domestic workers are people who:
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.
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.
If bands, orchestras or other entertainers are actual employees:
Musicians hired on a casual basis are usually paid schedular payments.
|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).|
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.
An owner can be a working owner of an LTC if:
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.
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.
These services may be of any kind needed for the partnership's business.
A working partner isn't automatically enrolled in KiwiSaver.
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.
Deduct PAYE as usual when you make a payment that is:
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.
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.
|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 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.
If you employ shareholder-employees, deduct PAYE from:
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).
Below are the different tax deductions you would make for shearers, shed-hands and shearing contractors.
|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.|
You may come across the following situations if you have shearing contractors and shearing gangs working for you.
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.
If you employ someone who has been unemployed for a certain time, Work and Income may subsidise that person's wages.
If you are registered for GST, you should be aware of your GST obligations regarding subsidised worker grants:
Find out more on subsidised employment from the Department of Work and Income under the "Related websites" section of our site.
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.
Find out more on "activity in the community" projects from the Department of Work and Income under the "Related websites" section of our site.