Schedular payments are payments made to contractors who perform certain activities. Tax is deducted from these payments but they’re different to salary or wage payments.
Who gets schedular payments?
Contractors doing certain activities or services, or contractors working in certain industries.
A contractor can be an individual, partnership, trust or company. Contractors can be New Zealand tax residents or tax non-residents.
The contractor's payer deducts tax from each payment before paying them.
Some examples of contractors getting schedular payments are:
- an IT project manager contracted by a recruitment agency (labour hire business) to one of the agency's clients
- a GP contracted to a medical centre
- a builder contracted to a labour hire business
- a freelance journalist paid to write a magazine article
- an insurance agent or salesperson paid commission
- a company director paid directors’ fees
- a commercial cleaning partnership paid by a local business to clean their offices
- companies contracted to supply labour to the agricultural, horticultural or viticultural sectors.
The Tax rate notification for contractors IR330C lists the activities which you can get schedular payments for.
Choosing to get schedular payments
You can choose to have your income treated as schedular payments in some circumstances. These are called voluntary schedular payments.
You can’t get voluntary schedular payments for income from salary or wages.
You need to get your payer to agree in writing to make schedular payments. The agreement could include:
your name and your payer’s name
a statement that your payments will be treated as voluntary schedular payments
the period it applies to
your signature and your payer’s signature.
You need to give your payer a Tax rate notification for contractors IR330C form showing the tax rate you want them to use.
Your schedular tax responsibilities
If you receive schedular payments you need to:
- work out your tax rate and declare your tax rate to your payer, or
- apply for a tax rate exemption and show your certificate of exemption to the person who pays you.