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Schedular Payment

What is a Schedular Payment?

Generally, schedular payments are made to contractors and subject to a tax at a flat rate. The contractor should be an independent contractor (not an employee of a company); or a company working in the agricultural, horticultural and viticultural industries; or a non-resident company, otherwise he is taxed on PAYE tax.

The tax rate varies from 10%-20% depending on the activities and the condition of the contractors. For example, the construction workers’ rate is 20%, the models’ rate is 20%. The detail can be referred to ITA Schedule 4.

It is a tax on source. The obligation of making the tax deduction lies with the payer (generally employer) (RD8(1)).

Why do we have this?

To ensure we have neutrality in our tax system and fairness is maintained. This method ensures that the tax is deducted at source.

How does it work?

The employer must file the monthly schedule with the IRD, which contains payroll information. All scheduler income tax collected will also be reported along with the normal payroll of employees.

A contractor will file the end of year return(generally IR3), and tax paid on their behalf will be used as a credit in the tax return.


The exemptions to the above include:

  1. A payment covered by an exemption certificate provided under section 24M of the Tax Administration Act 1994. Under this certificate, the contractor is responsible for filing an income tax return and paying provisional tax if required at the end of the year; or
  2. A payment for services provided by a non-resident contractor who has full relief from tax under a double tax agreement (DTA), and is present in New Zealand for 92 or fewer days in a 12-month period. They are automatically exempt from withholding tax; or
  3. A contract payment for a contract activity or service of a non-resident contractor when the total amount paid for those activities to the contractor or another person on their behalf is $15,000 or less in a 12-month period. The contractor should not enter into any other contracts with New Zealand parties that might cause the contractor exceed $15,000 threshold.