Contractor Tax Rate NZ: Schedular Payments, IR330C and the WT Code

Short answer: If your work is a schedular payment activity, the business paying you deducts tax before you get the money, at the rate you give them on form IR330C. You can use the standard rate for your activity (20% for labour-only building work, for example) or choose your own rate of at least 10% (15% if you hold a temporary entry class visa). Your tax code is always WT. If you don’t hand over an IR330C, the payer must deduct 45%. The deduction is a credit against your end-of-year income tax, not the final bill: you can still claim expenses, and a rate set too low leaves tax to pay.

Everything here follows Inland Revenue’s schedular payments guidance and applies to New Zealand tax-resident individual contractors in the 2027 tax year (1 April 2026 – 31 March 2027). If you aren’t sure you are a contractor at all, read contractor vs employee in NZ first; for what to put on your bills, see how to invoice as a contractor.

Who gets schedular payments in NZ?

Schedular payments are payments to contractors for certain kinds of work, mainly the supply of labour, with tax deducted at source. The activities are listed on the IR330C, Tax rate notification for contractors. They include:

• contracts wholly or substantially for labour only in the building industry
• agricultural, forestry and fishing boat work
• company directors’ fees and honoraria
• entertainers, modelling, and freelance contributions to newspapers and journals
• commissions to insurance agents
• labour hire arrangements
• ACC personal service rehabilitation payments

If your work isn’t on the list, no tax is deducted by default. You invoice the full amount and pay your own income tax through your IR3 and, once your bill passes $5,000, provisional tax. That is how most sole traders who invoice their own customers are taxed.

You can opt in, though. Inland Revenue allows voluntary schedular payments when tax doesn’t already have to be deducted and you and the payer both agree in writing. You then choose a rate or use the standard 20%, and give the payer an IR330C. Some contractors like this because tax is set aside before the money ever reaches them.

What is the IR330C and the WT tax code?

The IR330C is the form that tells your payer what rate to deduct, and WT is the tax code for every schedular payment. You fill in a separate IR330C for each source of contracting income, so three payers means three forms. On it you choose one of four routes:

Option	What it means
Standard rate	The rate printed on the IR330C for your activity
Your own rate	Any rate you choose, but not lower than 10% (15% on a temporary entry class visa)
Tailored tax rate	A rate below the minimum, which needs a certificate from Inland Revenue
Exemption	No deduction, which also needs a certificate from Inland Revenue

Some standard rates from the IR330C:

Activity	Standard rate	No-notification rate
Labour-only building contracts	20%	45%
Company directors’ fees	33%	45%
Voluntary schedular payments	20%	45%

The no-notification rate is the expensive one. If your payer has no completed IR330C from you, they must deduct 45%. On a $5,000 invoice that is $2,250 withheld instead of $1,000 at 20%. You would get the difference back after the year ends, but in the meantime you’re short. Fill the form in before your first invoice.

How do I choose my contractor tax rate?

Choose the rate that matches the income tax you will actually owe on your profit, as a share of what you’re paid. Inland Revenue warns that a rate too low for your circumstances may leave you with a lump sum to pay and make you liable for provisional tax.

A simple method:

1. Estimate your gross schedular income for the year.
2. Subtract the expenses you expect to claim to get your profit.
3. Work out the income tax on that profit at the NZ tax brackets.
4. Divide the tax by your gross income and round up to a whole percentage.

Here is that sum for the 2027 tax year, assuming schedular income is your only income and before any tax credits:

Gross schedular income	Expenses	Profit	Income tax	Tax as % of gross
$50,000	$8,000	$42,000	$6,258.00	12.5%
$70,000	$10,000	$60,000	$10,220.50	14.6%
$100,000	$15,000	$85,000	$17,927.50	17.9%
$140,000	$20,000	$120,000	$29,477.50	21.1%

So a contractor grossing $70,000 with $10,000 of expenses is roughly covered at 15%, while 20% overpays by about $3,780 a year. If you have a salary, rental income or other work, add it in: it fills the lower brackets first, pushing your schedular income into higher ones, so the right rate goes up.

Your rate only covers income tax. ACC levies are invoiced separately, so set those aside on top (see below).

Does the tax deducted cover my end-of-year tax?

Only if your rate was right. The tax deducted from schedular payments is a credit against your income tax for the year, and three things can happen:

• Rate too low. You have tax to pay after the year ends. If the residual amount is more than $5,000, you will also be a provisional taxpayer the following year.
• Rate about right. Little or nothing to pay, and no provisional tax.
• Rate too high. You get a refund, but only after the year ends and your return is processed.

Example. Using the $70,000 contractor above, with income tax of $10,220.50:

Rate elected	Tax deducted	After the year ends
10%	$7,000	$3,220.50 to pay
15%	$10,500	$279.50 refund
20%	$14,000	$3,779.50 refund

What is never deducted: Inland Revenue’s employer’s guide (IR335) confirms that no student loan, KiwiSaver or ACC earners’ levy deductions are made from schedular payments. ACC invoices you directly after your IR3 is filed. For 2026–27 the earners’ levy alone is $1.75 per $100 of liable earnings including GST, according to Inland Revenue’s ACC earners’ levy rates, so $60,000 of profit means about $1,050 plus a work levy for your industry. ACC levies for the self-employed explains the full bill.

Do I need to file an IR3 if tax is already deducted?

Not always. Schedular payments are one of the income types Inland Revenue works out for you through an automatic income tax assessment, so if they are your only income you may not need to file an IR3. Inland Revenue then sends a letter, “Information required to complete income tax assessment”, which gives you the chance to claim expenses against your schedular payments.

You do file an IR3 if you have other income that needs a return, such as business income you invoice directly. Schedular payments go in Question 12: tax deducted at 12A, gross payments at 12B, related expenses at 12C and the net figure at 12D. Don’t repeat those expenses at Box 29. The IR3 explained walks through the rest of the return.

Can I still claim expenses on schedular payments?

Yes. Schedular tax is deducted from the gross payment, but you are taxed on your profit, so the expenses you incur earning that income reduce the final bill. Tools, protective gear, the business share of your vehicle and phone, and accountancy fees are typical claims.

In the $70,000 example, without the $10,000 of expenses the tax would be on $70,000 instead of $60,000: $13,220.50 rather than $10,220.50. Claiming them is worth $3,000 at the 30% rate, and it only happens if you claim them in your IR3 or reply to Inland Revenue’s letter with the figures.

Inland Revenue says you must keep invoices and receipts as evidence for all expenses claimed, and its record keeping rules require you to keep them for at least 7 years.

When you invoice a payer who deducts schedular tax, you still invoice the full amount. The deduction happens on their side and shows on the remittance advice. Keep each remittance with its invoice: together they are your record of what was paid and what was withheld.

Tracking what you earned and what was withheld, and where does Keel fit?

Choosing a rate, checking it mid-year and filling in Question 12 all depend on knowing three numbers: what you invoiced, what you spent, and what was deducted.

Keel: Invoice Maker & Receipts, an iPhone app by Ilura Technology OÜ, keeps the first two. You create quotes that become invoices in one tap, send PDF invoices, capture receipts and expenses, log business mileage, and keep each item under its job and customer. “Who owes you” shows unpaid invoices and prepares reminder drafts that you review and send yourself; nothing is sent automatically. Records stay on your iPhone, with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected”.

Keel doesn’t choose your schedular rate, calculate tax or ACC, file your IR3 or connect to Inland Revenue. It is free with no invoice limit (free invoices carry a small “Made with Keel” footer), and Keel Lifetime is a one-time purchase of $249.99 USD (the App Store shows your local price) that adds custom branding, signature, premium templates and accountant-ready exports and reports. Keel on the App Store. More guides are on the New Zealand hub.

Frequently asked questions

What is the tax rate for contractors in NZ? There is no single contractor tax rate. Contractors are taxed at the same personal brackets as everyone else, on their profit. If your work is a schedular payment activity, tax is deducted at source at the rate you choose on an IR330C: your activity’s standard rate, such as 20% for labour-only building work, or your own rate of at least 10%.

What is the WT tax code in NZ? WT is the tax code for schedular payments. Every contractor who has tax deducted from schedular payments uses it, whatever rate they choose. The rate itself is set on the IR330C you give each payer.

What is the minimum tax rate for contractors in NZ? If you choose your own rate on the IR330C, it can’t be lower than 10%, or 15% if you hold a temporary entry class visa. A lower rate, or no deduction at all, needs a tailored tax rate certificate or an exemption certificate from Inland Revenue.

What happens if I don’t fill in an IR330C? Your payer must deduct tax at the no-notification rate of 45%. The excess is credited against your income tax and refunded after the year ends, but you lose the use of that money until then. Give each payer a completed IR330C before your first invoice.

Is ACC deducted from schedular payments? No. No ACC earners’ levy, KiwiSaver or student loan deductions are made from schedular payments. ACC invoices you directly after your income is reported, for the earners’ levy and a work levy for your industry, so set money aside for it on top of your schedular rate.

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This article is general information, not tax advice. Consult a qualified New Zealand tax professional.