NZ Taxation Advisory Blog

What Are Schedular Payments? Schedular payments are a type of income subject to withholding tax. They are typically made to contractors or businesses for specific services, such as construction, IT, or consulting work. If your company has received schedular payments, the Inland Revenue Department (IRD) will provide a summary of these payments to help you complete your tax return accurately. Reporting Schedular Payments in the IR4 Form Any such payments your company has received during the tax year needs to be declared in the IR4 form. It's important to note that if your company is a close company (a company with five or fewer shareholders), there are special rules that may apply. In some cases, tax deducted from schedular payments can be transferred (attributed) directly to the company’s shareholder-employees. This can help simplify the tax process for both the company and its shareholders. The Attribution Rule: A Key Anti-Avoidance Measure The attribution rule is designed to preve...

What Are Schedular Payments? Schedular payments are payments made to contractors for specific types of work or activities. These payments are defined under Schedule 4 of the Income Tax Act 2007 and are subject to withholding tax. This means that the payer (the business or individual making the payment) is required to deduct tax from the payment before passing it on to the contractor. The rules governing schedular payments are outlined in Section RD 8 of the Income Tax Act 2007. This section provides the legal framework for how these payments should be treated for tax purposes. Tax Deduction from Schedular Payments The payer is responsible for withholding the correct amount of tax and forwarding it to the Inland Revenue Department (IRD). To determine the appropriate tax rate, payers can refer to the Tax Rate Notification for Contractors (IR330C) form. this form includes a comprehensive list of activities that qualify as schedular payments. Examples of these activities include constructi...