Keeping it Casual: All you need to know about Schedular PaymentsCategories News & Updates
Just when you thought tax jargon couldn’t get any harder, the IRD goes and changes ‘Withholding Tax’ to ‘Schedular Payments’! Schedular payments only affect a small portion of New Zealand workers, particularly those who work casual, temporary, seasonal and contracting jobs. This could be you! So, here’s the lowdown…
Withholding Tax 2.0
You may have recently heard of the ominously named “scheduler payments” and now you’re wondering what they are. Fair enough! Fortunately they’re not so mysterious.
Schedular payments are simply what was formerly known as ‘withholding payments’.
Basically, it boils down to this: self-employed contractors, seasonal and temporary workers, and companies who operate in horticultural, agricultural, and vinicultural industries are responsible to pay tax at a flat rate. The IRD requires these payments to make sure that you’re paying tax during your employment so you’re not hit with an insurmountable tax bill at the end of the tax year!
Schedular payments really only concern contractors who need to take their tax responsibilities into their own hands, and the companies that pay these kinds of workers.
If you’re one of the following then you’re going to need to pay some tax on these payments:
- self-employed contractors
- sole traders
- companies (but only in the agricultural, horticultural and vinicultural industries)
Some of the most common types of schedular payments include:
- commission paid to insurance agents or salespersons
- company directors’ fees
- payments for most forms of agricultural, horticultural and forestry work
- payments for non-residential cleaning, gardening, vermin or weed destruction
- payments for the supply of labor to building projects
- payments to photographers, journalists, writers, artists, and entertainers
- fees for persons exhibiting or demonstrating goods
- payments for modelling
- contract payments to non-resident contractors
Kinds of Casual/Seasonal Work in New Zealand
So, schedular payments only take into account the people who work casually or seasonally in New Zealand. There’s no employment legislation that defines exactly what a casual job is, but it usually means that you work when you’re required to work, say when your boss calls you into work. Seasonal jobs on the other hand only come up every season, and often fixed term. For example, if you’re picking apples, once the season is over you’re out of a job. New Zealand attracts tourists all year round, and these young travelers often make their monies in the orchards and vineyards in north and south islands.
The most popular temporary, casual and seasonal jobs include the following:
New Zealand attracts tourists all year round, particularly during the summer (November to March), with a tourist boom over the Christmas and New Year period. Jobs are available in shops, at tourist attractions, and on boats and beaches throughout the country during these periods. For the rest of the year, the tourist industry centres mainly around skiing, when Queenstown in the South Island is the busiest resort.
Hotels & Catering
Hotels, motels, lodges, restaurants and bars normally require barmen and barmaids, handymen, receptionists, and waiters and waitresses throughout the year.
Employment agencies usually have vacancies. If you want to go it alone, there’s nothing to stop you approaching hotels and restaurants directly, although it’s wise to telephone and ask about vacancies before travelling to the back of beyond looking for work.
There are thousands of farms of all sizes throughout New Zealand requiring temporary labour, particularly during busy periods such as harvest times or sheep-shearing. Available work ranges from skilled jobs such as cattle herding and sheep shearing to unskilled tasks such as apple and grape picking. The work is likely to be hard and the hours long, but in addition to wages (around $375 per week, unless you’re paid a ‘piece’ rate according to how much produce you pick) you may receive free accommodation and food (all the lamb and kiwi fruit you can eat!).
Good places for fruit picking include Blenheim, the Christchurch area, Gisborne, Kerikeri, Motueka, Nelson, Otago, Tauranga, Te Puke and the Wairu Valley. The soft fruit picking season (apples, grapes, peaches, strawberries and – need we say – kiwi fruit) starts in December and lasts until April or May.
You don’t need to go far to find a sheep farm (sheep station) in New Zealand, but the far north-east and south of the North Island, and the Otago and Canterbury regions of the South Island are the main centres for this industry. Vacancies for farm work are sometimes advertised on notice boards in local hostels.
Some employment agencies specialise in temporary and casual job vacancies in offices in most parts of the country, although principally in Auckland and Wellington. It’s obviously an advantage if you have some experience; if you have a qualification in a profession such as accountancy, banking, finance, insurance or law, you could walk into a well-paid job, as these industries frequently have short-term staff shortages. Hundreds of New Zealand professionals leave the country each year to spend 6 or 12 months working in Australia or the UK or make the ‘obligatory’ overseas tour, and qualified replacements are required to fill the vacancies.
As in most countries, casual jobs are often available in factories and warehouses such as cleaning, driving, labouring, portering and security work. Particularly numerous are casual, seasonal and temporary jobs in some of the massive plants that process and pack dairy products, fish, fruit, meat and vegetables.
This kind of work is notoriously unreliable, and plants that may be working flat out one week stand idle the next, e.g. when there’s a slump in the market or the season is over. Jobs of this kind can be found through employment agencies, in local newspapers or simply by turning up at the factory gate (very early!).
A number of books are available for those seeking holiday jobs, including Summer Jobs Abroad by David Woodworth and Work Your Way Around The World by Susan Griffith (both published by Vacation Work).
The Perks of Being a Seasonal Worker
Seasonal workers represent the single largest category of temporary workers within the OECD, comprising more than one in four in 2009 (OECD, 2010). Temporary or circular migration is seen as a way of enabling poorer, less-skilled workers to earn higher incomes abroad, send remittances to their home country, and benefit the host country with their labour (McKenzie, D., Gibson, J., 2010). New Zealand’s Recognised Seasonal Employer (RSE) scheme explicitly attempts to achieve this ‘triple win’ (Ramasamy et al, 2008). Tax codes
Most seasonal workers should use the M (main) or S (secondary) tax code. There rates do not apply for RSE workers. All employees need to complete their IR330 tax form for their employer. Tax is deducted from weekly earnings. Payment of wages
It is industry practice for your employer to pay wages into your bank account and to provide a pay slip showing your gross earnings, tax and holiday pay details. Be careful about being paid in cash, especially if your employer doesn’t provide you with a pay slip.
A summer job gives you the chance to pick up some new skills and to pick ripe berries!
With spring upon us and summer just around the corner, there are a range of seasonal jobs cropping up.
Whether you’re between jobs, a student, working part-time, or studying, or want some experience in a particular industry, seasonal work can be an ideal way to earn some extra cash, get some new skills and meet some interesting people.
Seasonal work can help you pick up skills you need to get the job you really want. In addition, developing a good work record at your holiday job can lead to a permanent role with an organisation.
Many of the employers offering seasonal jobs on farms and orchards also offer accommodation, which makes travelling to another region for work less hassle. If there is no on-site accommodation you can often borrow tents to pitch up at nearby campsites, or find cheap lodging nearby. Some employers even offer a free shuttle in the peak season.
There’s no doubt that summer jobs usually involve long days and a lot of stamina, for example lifting and climbing ladders. But they also offer an ideal way to save up, and with a large number of summer jobs, enjoy the outdoors.
For many of the summer jobs, your best chance of getting work in the field is to contact the employers in your area, register with an employment agency that specialises in recruitment in the field such as agriculture or warehousing, or look up the relevant jobs or industry on the main jobs sites such as Trade Me and Seek.
So what are you waiting for, it’s not too early to apply now!
Summer fruit picking and packing (berry fruit, stone fruit and vegetables)
Paying non-resident contractors
A person, company or other entity who isn’t a tax resident in New Zealand, and who has a contract, agreement or arrangement to perform a contract activity in this country, is classified as a non-resident contractor.
Some non-resident contractors fail to declare their New Zealand income and meet the PAYE requirements for their employees. Their employees also evade their tax obligations by not declaring their New Zealand income.
Any organisation in New Zealand that engages a non-resident contractor is required to deduct non-resident contractor’s tax from the contract payments, unless the non-resident contractor provides an exemption certificate from us.
The tax consequences of failure to deduct this tax could substantially increase the costs to the organisation of engaging with the non-resident contractor.
What we are doing
We have been working closely with key agencies to help industries and non-residents understand what they need to do to comply with their tax obligations.
Our goal is to ensure all non-resident contractors and contract payers understand the tax requirements and what happens if they don’t comply.
We are continuing to assess the level of non-compliance in the New Zealand business community and proactively seek ways to identify non-resident entities contracting in New Zealand.
We have an ongoing focus on the Christchurch rebuild.
Help I’m One of Them!
If you’ve determined that you need to pay tax on schedular payments, you need to use the “WT” tax code on your tax return. That said, you might actually be eligible for a wondrous certificate of exemption or even a special tax rate. There are various exemptions which mean that you won’t have to pay tax on the schedular payments you receive. These certificates need to be renewed by the employer each year. You can find this list of exemptions on the IR335.
Contractors are also responsible for their own ACC earner’s levy and student loan repayments.