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Employer responsibilities Ngā kaiwhakawhiwhi mahi takohanga

Certificates of exemption on schedular payments (IR331)

Employers do not need to deduct withholding tax from payments made to contractors who hold a current certificate of exemption from withholding tax.

Eligibility for a certificate of exemption

Individuals, trusts, partnerships and companies can apply for a certificate of exemption (COE) if they:

  • are in business
  • receive schedular payments that are subject to tax under Schedule 4 of the Income Tax Act 2007 and,
  • have a good tax compliance history with us (filing returns and making payments on time, and using the right tax codes for employees).

If a contractor you employ has a valid COE, you can make payments without deducting withholding tax.

The COE does not exempt an employee's salary or wages from PAYE deductions. They can apply for an exemption from PAYE deductions by completing a Request for PAYE exemption on schedular payments (IR332).

Changes to labour hire arrangements

As of 31 March 2018, a COE does not apply to a contractor paid under a labour hire arrangement.

Instead of applying for a COE, a contractor paid under a labour hire arrangement can complete a Special tax rate application (IR23BS) to apply for a 0% tax rate.

We'll grant this rate if their tax compliance history is in good standing and they are a New Zealand tax resident.

Checking the certificate is valid

If you're not sure if the contractor has given you a valid COE we can check for you. We'll need the certificate details when you contact us.

Request or renew a COE (IR331)

A contractor can request a certificate of exemption through myIR Secure Online Services.

During January and February, we send renewal requests to all Certificate of exemption from withholding tax (IR331) holders with certificates expiring at the end of March of that same year.

If they choose to renew their certificate, we'll send the new one in time for the beginning of the tax year (1 April).