Schedular Payments
Schedular payments are payments made to certain contractors and self-employed workers where the payer withholds tax before making the payment — similar to how PAYE works for employees. This system ensures contractors pay tax throughout the year rather than facing a large bill at year end.
Common schedular payment activities include contracting, freelancing, company director fees, election-day work, agricultural work, and entertainment. The standard withholding rate varies by activity type, but contractors can apply to IRD for a special tax rate (called a certificate of exemption or special rate) if the standard rate doesn't match their expected tax liability.
As a contractor receiving schedular payments, you'll receive a withholding tax certificate from each payer showing the gross payment and tax withheld. You'll include these on your IR3 tax return and can claim business expenses to reduce your taxable income.
Related Terms
PAYE
PAYE (Pay As You Earn) is the system that New Zealand employers use to deduct income tax from employees' wages and salaries.
IRD
Inland Revenue Department (IRD), commonly known as Inland Revenue or simply IRD, is the New Zealand government agency responsible for collecting taxes, distributing social support payments, and enforcing tax compliance.
Tax Return / IR3
An IR3 is New Zealand's individual income tax return — an annual declaration of all your income, expenses, and tax credits filed with IRD.
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Use our free tool to see how schedular payments affects your tax.