NZ Self-Employment Tax Calculator

Self-employed individuals in New Zealand pay income tax on their net profit (gross income minus allowable business expenses) at the same progressive rates as employees.

Unlike employees, self-employed people must pay provisional tax in advance once their residual income tax exceeds $5,000. Standard provisional tax is paid in three installments throughout the year: 28 August, 15 January, and 7 May.

Self-employed individuals also pay the ACC earner's levy (1.67% for 2025-26, 1.75% for 2026-27, up to the annual cap). KiwiSaver is optional for the self-employed — you can choose to contribute voluntarily.

If you work as a contractor receiving schedular payments — rather than invoicing clients directly for gross amounts — the business paying you generally withholds tax at source. That withholding is not your final tax bill; you still file an IR3 and claim expenses, then square up.

If your contracting work falls under Schedule 4 of the Income Tax Act 2007 — company director fees, labour-only building work, cleaning, entertainment, agricultural contracting, and more — the business paying you must deduct withholding tax (WT) before paying you, using the tax code WT. You declare your rate on an IR330C — Tax rate notification for contractors, given directly to each payer (never sent to IRD).

The IR330C standard rate varies by activity. Selected examples (see the full IR330C form for all activities):

Standard vs elected rate: the IR330C shows a default "standard" rate for your activity, but you can elect a different rate to better match your expected tax position. Resident contractors can elect down to 10% without IRD approval — below that requires a tailored tax rate application via myIR. Non-resident contractors on a temporary entry visa have a 15% floor.

The no-notification rate: if you don't give your payer a completed IR330C (sections 1 and 3), they are legally required to withhold at 45% — far more than most contractors actually owe. The one exception is non-resident contractor companies, where the no-notification rate is 20%. Over-withholding is refunded after your IR3 assessment, but it ties up cash all year — so always hand over a completed IR330C before your first payment.

Not every contractor is on schedular payments — if your work isn't a listed Schedule 4 activity (e.g. most consulting, trades, and creative freelance work invoiced directly to clients), you invoice gross and manage your own tax through provisional and terminal tax instead.

There's no PAYE when you're self-employed or contracting outside schedular payments — no employer deducts tax on your behalf. Instead, you manage tax in three stages:

• During the year: WT withheld at source (if you're on schedular payments) or nothing withheld at all (if you invoice gross) — plus voluntary provisional tax instalments once your residual income tax exceeds $5,000.
• After year end: file an IR3 declaring gross income, expenses, and any WT already withheld.
• Terminal tax: the final square-up between what you've paid (WT + provisional tax) and what you actually owe — use the Terminal Tax Calculator to estimate this.

ACC works differently too. Employees have the ACC earner's levy deducted through PAYE; self-employed people and contractors on schedular payments are invoiced directly by ACC (typically around September) once IRD passes your IR3 earnings to them, based on your industry Classification Unit. Estimate your levy with the ACC Levy Calculator.

A contractor doing labour-only building work invoices $85,000 in schedular payments for 2025-26, with $8,000 of deductible business expenses (tools, vehicle, phone). Their payer withholds WT at the 20% standard rate for labour-only building contracts.

WT is withheld on gross schedular payments, but tax is actually owed on net profit after expenses. Here, $17,000 was withheld across the year against a final liability of $16,606 (income tax + ACC on $77,000 net profit) — so this contractor gets a $394 refund at IR3 time. The gap shrinks the more deductible expenses you have relative to the standard WT rate for your activity — one reason it's worth keeping receipts even when tax is already being withheld.

ACC in this example ($1,286) is not deducted through WT — it's invoiced separately by ACC after your IR3 is processed.

You must register for GST once your turnover reaches $60,000 in any 12-month period (or you expect it to). Below that, registration is voluntary. Once registered, you charge 15% GST on your invoices and claim back GST on business purchases. Check your position with the GST Calculator.