Withholding and Schedular: Who Deducts, Who Files, and How it Differs from PAYE
Withholding and Schedular is our hub for the Inland Revenue (IRD) process on schedular payments: who is the payer, who is the payee, when tax code WT applies, and which forms sit in myIR. Inland Revenue treats these payments as different from salary or wages. The deduction is income tax withheld up front. It is not GST, and it is not a PAYE payslip.
This page is for the 2026/27 tax year (1 April 2026 to 31 March 2027). It is for Tauranga film crew, Christchurch labour hire payers, and Auckland designers who invoice through an agency. Figures are working papers. GSTCalc.nz is not Inland Revenue. Ads may fund this free site. This is not tax advice.
The story people tell themselves: the agency already paid my tax
A first contract through a recruitment desk often shows a lower bank deposit than the invoice. Many Kiwis then treat that gap as GST already paid, or as proof they are on PAYE. Inland Revenue’s schedular payments page says tax is deducted from contractor payments for certain labour heavy work, and that those payments are different to salary or wage payments. The payer sends the withheld amount to Inland Revenue as income tax. If you are GST registered, or you must register, the GST return is still yours to file in myIR.
Who does what: payer, payee, Inland Revenue
Inland Revenue’s about schedular payments for contractors page says a contractor can be an individual, partnership, trust, or company, and can be a New Zealand tax resident or a non resident. The same page lists typical payees: an IT contractor placed by a labour hire business, a builder contracted to a labour hire business, a freelance journalist, an insurance agent paid commission, a company director paid directors fees, a commercial cleaning partnership, companies supplying labour to farming or horticulture, and non resident contractors, entertainers, and sportspeople. Some prize money can also be a schedular payment.
1
Confirm it is a schedular activity, and a contractor
IR330C says you receive schedular payments if you are not an employee and the work is an activity listed on the form (the full list sits in Schedule 4 of the Income Tax Act 2007). IR335 says if the work is not on that list, the payer does not deduct schedular tax. Employment NZ decides employee versus contractor on the real working relationship, not the invoice title.
IR330C says you receive schedular payments if you are not an employee and the work is an activity listed on the form (the full list sits in Schedule 4 of the Income Tax Act 2007). IR335 says if the work is not on that list, the payer does not deduct schedular tax. Employment NZ decides employee versus contractor on the real working relationship, not the invoice title.
2
The payee notifies the rate (or shows an exemption)
Give the payer a completed Tax rate notification for contractors IR330C for each source of contracting income. Or show a tailored tax rate certificate, a prescribed withholding rate certificate, or a current certificate of exemption. Inland Revenue’s getting schedular payments page: declare your tax rate to your payer. If you have an exemption, show the certificate.
Give the payer a completed Tax rate notification for contractors IR330C for each source of contracting income. Or show a tailored tax rate certificate, a prescribed withholding rate certificate, or a current certificate of exemption. Inland Revenue’s getting schedular payments page: declare your tax rate to your payer. If you have an exemption, show the certificate.
3
The payer deducts, files employment information, and pays Inland Revenue
Use the rate on the IR330C, the tailored certificate, or the no notification rate if no form arrives (45%, or 20% if the contractor is a non resident company). File employment information: within 2 working days of payment if you file electronically on a pay day basis, or within 10 working days if you file on paper. Pay the deduction when you pay any PAYE on staff wages. Do not deduct student loan, KiwiSaver, or ACC levies from schedular payments.
Use the rate on the IR330C, the tailored certificate, or the no notification rate if no form arrives (45%, or 20% if the contractor is a non resident company). File employment information: within 2 working days of payment if you file electronically on a pay day basis, or within 10 working days if you file on paper. Pay the deduction when you pay any PAYE on staff wages. Do not deduct student loan, KiwiSaver, or ACC levies from schedular payments.
4
The payee still owns GST and the year end income tax return
Inland Revenue: register for GST if you earn $60,000 a year or more (before expenses) from schedular payments, or if you add GST onto your prices. IR330C says you will generally complete an income tax return at the end of the tax year. File the IR3 in myIR when Inland Revenue asks. The due date on Inland Revenue’s IR3 page is 7 July unless you have a tax agent or an extension of time.
Inland Revenue: register for GST if you earn $60,000 a year or more (before expenses) from schedular payments, or if you add GST onto your prices. IR330C says you will generally complete an income tax return at the end of the tax year. File the IR3 in myIR when Inland Revenue asks. The due date on Inland Revenue’s IR3 page is 7 July unless you have a tax agent or an extension of time.
Source: Inland Revenue schedular payments, about schedular payments for contractors, deductions from payments to contractors, and tax schedular payments and file employment information. Activities: Income Tax Act 2007 Schedule 4. Status tests: Employment NZ employee or contractor.
Three clocks: PAYE, schedular withholding, and GST
Inland Revenue’s tax code page says use tax code WT for income from schedular payments. Employees use a Tax code declaration IR330. GST sits on a taxable activity, not on the job title. Mixing those clocks is the usual cashflow mess on a first contract.
| Clock | Who it is for | What Inland Revenue asks for | What it is not |
|---|---|---|---|
| PAYE | Employees on salary or wages | IR330 and an employee tax code | Not GST, and not tax code WT |
| Schedular withholding | Contractors on listed activities | IR330C and tax code WT | Not a GST substitute, and not a payslip |
| GST | A taxable activity that is GST registered, or must register | GST returns in myIR | Not the WT amount the payer already sent |
If you are the payer
Collect the IR330C (or the exemption or tailored certificate). Deduct using that rate. If no IR330C arrives, use the no notification rate. File employment information on the pay day or twice monthly timetable Inland Revenue sets. Keep the IR330C for 7 years after the last schedular payment to that person. If Inland Revenue issues a prescribed withholding rate, use that rate and pay any extra prescribed amount on tax code ARR.
If you are the payee
Complete a separate IR330C for each payer. Tell the payer if your tax code changes. You can use the standard activity rate, choose your own rate (at least 10%, or 15% if you are a non resident on a temporary work or entry visa), apply for a tailored tax rate, or apply for a certificate of exemption. Keep GST and income tax in myIR as your own accounts.
Pull highlight: Inland Revenue’s tax code page: use the WT tax code for income from schedular payments. IR330C says your tax code will always be WT.
When withholding applies, and when a label is not enough
Withholding applies when the payer makes a schedular payment for an activity Inland Revenue lists, and the payee is a contractor, not an employee. IR330C also allows voluntary schedular payments: if tax is not ordinarily deducted, you can choose to have it deducted if the payer agrees in writing. Labour hire is a common forced path: a payment by a labour hire business to a person performing work for the hire firm’s client sits on the IR330C activity list.
Calling someone a contractor on a purchase order does not settle employment law. Employment NZ’s employee or contractor page says contractors invoice under a contract for services and are not covered by most Employment Relations Act 2000 rights. From 21 February 2026 a gateway test can treat a worker as a specified contractor if every listed criterion is met. If any criterion fails, the common law tests still apply: intention, control, integration, and economic reality. Employment NZ notes that in special situations the person paying a contractor may deduct withholding tax. That deduction does not turn the worker into an employee for GST or holiday pay.
The GST and employment mix up is a separate guide: contractors vs employees. Contractor GST registration and invoices sit in GST for contractors basics. Sector work (film, farm labour, gig) starts on Industry Specific GST.
Forms, myIR, exemptions, and records
Inland Revenue’s work out and declare page: download IR330C or get it from the person who pays you, use your IRD number, then hand the completed form to the payer. Do not send IR330C to Inland Revenue. The payer keeps it. IR330C says keep that completed form with business records for seven years following the last schedular payment to that person or entity. Inland Revenue’s record keeping page says keep records (including electronic records) for at least 7 tax years, in English or Māori unless Inland Revenue approves another language.
Exemption is a certificate, not a verbal deal with the client
A client cannot drop withholding because your accountant “handles it”. Inland Revenue’s certificates of exemption page: New Zealand tax residents can apply if they are in business, have a good filing and payment record, and the payer is not a labour hire business under a labour hire arrangement. A resident paid by labour hire needs a 0% special tax rate instead. Apply in myIR (Income Tax, More, Tailored Tax, Certificate of Exemption), or send IR332. Inland Revenue aims to process within 10 working days (longer in February and March). Renew every tax year. IR335 still labels the certificate you show the payer as IR331. With an approved certificate you do not give the payer an IR330C.
Source: Inland Revenue work out and declare my tax rate, certificates of exemption, apply for an exemption, what tax code should I use, and record keeping. IR3 filing: IR3 individual income tax return.
Use case: Christchurch labour hire Ltd
Situation: Hypothetical hire firm places a self employed builder on a commercial site. The builder invoices the hire firm, not the site owner. Withholding: the hire firm is the payer. It needs an IR330C (or a 0% tailored rate if the builder is a resident who wants no deduction: a certificate of exemption cannot be used on labour hire for a resident). It files employment information and pays the withheld tax. GST: still the builder’s taxable activity. Inland Revenue’s $60,000 test, or adding GST to prices, still applies. Action: collect IR330C before the first pay, code WT, keep the form 7 years, and do not treat the net bank deposit as “tax done”. For the GST exclusive split on an invoice, use the withholding tax calculator once. Build the tax invoice with the GST invoice generator.
How this differs from PAYE and GST
PAYE follows wage tables and employee tax codes. Schedular withholding is a flat percentage of the gross schedular payment. Employer’s guide IR335 (June 2026) works that percentage on the GST exclusive amount, then pays the GST component through to a GST registered contractor. Inland Revenue interpretation statement IS 17/06 says the same: apply the rate to the schedular payment exclusive of any GST charged. This hub stays on who files and which form. Dollar splits and activity rate tables stay on the calculator linked above.
GST is a tax on taxable supplies. Inland Revenue’s registering for GST page: you must register if you carry on 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. That is a different myIR account from employment information. First GST decisions sit on the GST Basics Guide. The wider map is GST Guide NZ. Register in myIR using how to register for GST in NZ. Everyday plus GST maths stays on the GST calculator. Cash wages sit on the PAYE calculator. Expense records sit in Business and Expenses GST. Bank interest uses resident withholding tax</a, a different Inland Revenue clock, not this hub.
What people get stuck on
PersonalFinanceNZ threads keep mixing the agency deduction with the GST return. Inland Revenue keeps them separate: the payer withholds income tax, and you still return GST if you are registered or must register. Geekzone threads treat the IR330C activity table as a final tax bracket. It is a withholding rate for the year. Inland Revenue’s about page says if you declare the wrong rate you can have tax to pay at year end, and unpaid debt can trigger a prescribed withholding rate.
MYOB and Xero community posts are about how software books the deduction, not about whether the law applies. A client “forcing” withholding on listed work is often just following Inland Revenue’s payer rules. Quora answers that still cite a $40,000 GST threshold, or treat 1990s resident withholding on contracts as today’s rule, are not current New Zealand law. Medium pieces on PAYE salaries and US withholding are not schedular payments. Employment NZ’s $200,000 unjustified dismissal threshold is an employment law change from 21 February 2026. It does not set a GST or WT rate.
Frequently asked questions
Is schedular withholding the same as PAYE?
No. Inland Revenue says schedular payments are different to salary or wage payments. Employees use IR330 and a PAYE tax code. Contractors on listed activities use IR330C and tax code WT. The payer still files employment information, but student loan, KiwiSaver, and ACC levies are not deducted from schedular payments.
Does withholding tax replace GST?
No. Inland Revenue’s about schedular payments page treats GST as a separate registration test: $60,000 a year or more (before expenses) from schedular payments, or you add GST onto your prices. The WT the payer sends is income tax, not your GST return.
What tax code do I use for schedular payments?
WT. Inland Revenue’s tax code page says use the WT tax code for income from schedular payments. IR330C says your tax code will always be WT. A prescribed extra amount uses tax code ARR on the payer’s employment information.
Can I tell my client not to deduct withholding?
Only if Inland Revenue has approved a certificate of exemption (or a 0% tailored rate where a resident labour hire rule blocks the certificate). Show that certificate to the payer. A verbal agreement with the client is not enough. Residents paid by a labour hire business under a labour hire arrangement cannot use the certificate for those payments.
Last verified 14 September 2026 against Inland Revenue schedular payments, about schedular payments for contractors, getting schedular payments, work out and declare tax rate, deductions from payments to contractors, tax schedular payments and file employment information, certificates of exemption, apply for exemption, what tax code should I use, registering for GST, record keeping, and the IR3 individual income tax return; Tax rate notification for contractors IR330C (2024); Employer’s guide IR335 (June 2026); Income Tax Act 2007 Schedule 4; Employment NZ employee or contractor. GSTCalc.nz is a free New Zealand publisher of tax calculators and guides. Ads may fund the site. We are not Inland Revenue and this is not tax advice.
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