Self Employed Tax NZ: IR3, First Year and GST Clocks
Self employed tax NZ is our hub for how Inland Revenue (IRD) treats people who work for themselves: contractors, sole traders, and small operators who invoice in their own name. You use your individual IRD number. You pay income tax on net profit by filing an individual income return. This page is the filing map, not a rate worksheet.
This page is for the 2026/27 tax year (1 April 2026 to 31 March 2027). It is for Wellington designers, Hamilton tradies, and Christchurch contractors who still have a PAYE job on the side. Figures are working papers. GSTCalc.nz is not Inland Revenue. Ads may fund this free site. This is not tax advice.
Official rule: who is self employed for income tax
Inland Revenue’s self employed page says self employed people carry out business activity on their own. That includes contracting, working as a sole trader, and small business owners. Usually you can start without a formal legal set up. You use your individual IRD number, you can claim expenses for that business activity, and you register for GST if you earn over $60,000 a year. GST is a separate clock from income tax.
IR3 versus an income tax assessment
Inland Revenue’s IR3 page says an individual income tax return tells IRD about income for the year and the expenses you are claiming, then calculates a refund or tax to pay. The tax year is 1 April to 31 March. IR3 returns are different from income tax assessments, where Inland Revenue works out your tax for you from income it already holds.
Income tax assessment
IRD already has salary, wages, benefits, interest, and some PIE income reported to it. If that is all you have, IRD may work out your tax without an IR3. People still search this as a personal tax summary. Use Inland Revenue’s current name: income tax assessment.
IR3 individual return
<p style="margin: 0;font-size: 14px;line-height: 1.65;color: #475569"You need an IR3 if you received more than $200 (before tax) in income Inland Revenue has not been told about, even for part of the year. Self employed profit sits here. In myIR, PAYE already reported is pulled in. Untaxed business income usually needs a financial statements summary IR10 as well.
Source: Inland Revenue individual income tax return IR3 and complete my IR3. Add the income type in myIR when you start: update my income type. Reddit threads that cannot find the IR3 usually have not added self employment as an income type yet.
Pull highlight: Inland Revenue: you need to complete an IR3 if you received more than $200 (before tax) in income that IRD has not been told about, even if this was only for part of the tax year.
Five clocks: PAYE, withholding, IR3, GST, ACC
Self employed tax is not one form. Employment New Zealand’s employee or contractor page says a contractor generally pays their own tax to IRD. In special situations the payer may deduct withholding tax. GST registration is a turnover test, not a profit test. ACC sends its own invoice.
| Clock | What triggers it | What you file or pay |
|---|---|---|
| PAYE | You are an employee on wages or salary | The employer deducts PAYE. That job still appears on your IR3 if you also have self employed income. |
| Withholding | Schedular payments for certain contractor work | Payer deducts tax. You still file an IR3. IR330C is how you declare a rate. This is not GST. |
| IR3 income tax | Self employed net profit, plus other untaxed income over $200 | File by 7 July unless you have a tax agent or extension of time. Terminal tax is usually 7 February the next year, or 7 April with an agent. |
| GST | Taxable activity with turnover at least $60,000, or you add GST to prices | Register in myIR. GST Act 1985 s 51(2): apply within 21 days of becoming liable. GST returns are not an IR3. |
| ACC levy | Self employment: CoverPlus from day one | ACC invoices you. Liable income comes from the IR3 (or IR7 for a partnership or look through company). First invoice is after the first year. Then usually July or August. |
Source: Inland Revenue schedular payments, registering for GST, and the GST Act 1985 s 51. ACC: CoverPlus invoice and MyACC for Business. Contractor labelling is a different trap: contractors vs employees. GST invoices sit in GST for contractors basics.
Income tax clock
Tax on net profit after business expenses. Same individual rates as employees. Collection is different: you file and pay. When you need a dollar estimate of income tax on net profit only, open the income tax estimate tool.
GST clock
Inland Revenue charges GST at 15% on most goods and services. You must register if you carry out a taxable activity and turnover was at least $60,000 in the last 12 months, or you expect it will be in the next 12 months, or you add GST to prices. Expenses do not come off that turnover test.
First year is not tax free
Inland Revenue’s paying tax in your first year in business page is blunt: your first year is not tax free. If you use the standard, estimation, or ratio options, you will not need to pay provisional tax during that first year. AIM is different: you pay when you make a profit, even in year one. Income tax from the first year is usually due 7 February the following year (7 April with an agent). That bill can land in the same season as provisional tax for year two if residual income tax from the last return was more than $5,000. Voluntary payments in year one may qualify for an early payment discount. For the 2027 income year Inland Revenue’s rate is 4.25%, not the older 6.7% figure still circulating on forums.
Source: Inland Revenue paying tax in your first year in business and provisional tax. Instalment options sit on the Provisional Tax hub. Do not use this page for instalment dollar splits. New operators can follow the new business GST compliance roadmap.
Expenses, records, and drawings
Inland Revenue’s types of individual expenses page: claiming expenses incurred in generating income reduces taxable income. You claim them on the return, not on a separate “expense form”. The IR3B schedule of business income lists typical lines: ACC levies, advertising, home office, motor vehicle, and the rest. IR3B says do not include drawings: drawings are not deductible. Apportion private use.
Record keeping: keep records of cash and non cash sales and expenses, including electronic records, for at least 7 tax years, in English or Māori unless IRD approves another language. Cloud storage off shore needs Inland Revenue approval for you or the provider. Source: record keeping and types of individual expenses. Expense GST claims sit in Business and Expenses GST.
Contractor versus employee is a status test
Employment New Zealand: a contractor is engaged under a contract for services, invoices for work, and is not covered by most employment law. An employee has an employment agreement and is paid wages or salary. Status follows the real working relationship, not the label on the invoice.
A gateway test came into law on 21 February 2026 and is not retrospective. If every gateway test is met, the worker is a specified contractor. If any test is missed, the common law tests still apply: intention, control versus independence, integration, and economic reality. Source: Employee or contractor (Employment New Zealand). Hobby versus taxable activity is a different GST test: taxable activity hobby vs business. Gig platforms have their own GST overlay: Uber and gig economy GST rules.
Use case: Wellington graphic designer
Situation: Hypothetical sole trader invoices a few studios in year one. Turnover stays under $60,000. They still have a part time PAYE cafe job. Income tax: add self employment as an income type in myIR, keep invoices and expense records, file an IR3 after 31 March. GST registration is not forced by starting the business. Action: tell Inland Revenue you are working for yourself (business.govt.nz becoming a sole trader). Register a MyACC for Business account. Do not treat year one as tax free.
Use case: Hamilton electrician and Christchurch film contractor
Situation: Hypothetical Hamilton electrician’s taxable supplies pass $60,000 in a rolling 12 months. Hypothetical Christchurch film contractor is paid on schedular payments. Clocks: the electrician applies for GST within 21 days of becoming liable and still files an IR3 for income tax. The film contractor’s withholding is income tax already deducted, not GST, and they still file an IR3. Action: register GST in myIR if the $60,000 test bites: register for GST in NZ and GST 60k threshold guide. Withholding maths stays on the withholding tax calculator.
Trap: mixing the clocks, or treating a label as the law
Quora posts that still say you only register for GST at $40,000 are stale. Inland Revenue and the GST Act 1985 use $60,000. Australian tax free thresholds and PAYG instalments on MYOB Town Square are not New Zealand law. A Ltd that pays you PAYE is not the same as drawing from a sole trader bank account. Everyday plus GST quotes still sit on the GST Guide NZ hub. First GST decisions start at the GST Basics Guide. Industry overlays sit in Industry Specific GST.
What people get stuck on
PersonalFinanceNZ threads keep asking whether you “register” as a sole trader. business.govt.nz becoming a sole trader: you do not register the person with a government agency the way you incorporate a company. You need an IRD number and you tell Inland Revenue you are working for yourself. There is no separate sole trader IRD number.
Geekzone threads mix IR3 and IR10. IR3 is the individual return. IR10 is the financial statements summary that often travels with untaxed business income. Claiming an expense is not a separate claim form: you reduce net profit on the return and keep the records. Side hustle income on top of PAYE still needs an IR3 when IRD has not been told about it.
Frequently asked questions
Do I need to register as a sole trader in New Zealand?
No company style registration is required just to be a sole trader. business.govt.nz says you inform Inland Revenue that you have started working for yourself and you use your personal IRD number. Add the self employment income type in myIR. GST registration is a separate $60,000 (or charging GST) test.
Is the first year of self employed tax free?
No. Inland Revenue says your first year in business is not tax free. Standard, estimation, and ratio options usually have no provisional tax in that first year. You still file an IR3 and pay any residual income tax, usually by 7 February the next year (7 April with an agent).
When do I file an IR3 instead of waiting for an income tax assessment?
File an IR3 if you received more than $200 (before tax) in income Inland Revenue has not been told about, including self employed profit. Send the return by 7 July unless you have a tax agent or an extension of time. Complete it in myIR once IRD says the return is ready, often after payer information lands in June.
Does GST registration replace my IR3?
No. GST returns account for 15% GST on taxable supplies. The IR3 accounts for income tax on net profit. You can be GST registered and still file an IR3. You can file an IR3 and stay outside GST if you have a taxable activity under $60,000 and you do not add GST to prices.