Schedular Payments and Contractor Withholding Tax
Schedular payments are payments to certain contractors and self-employed workers where the payer withholds tax before paying — much like PAYE for employees, but for contract work. You declare your chosen tax rate on an IR330C form, the payer deducts tax at that rate, and you square up the rest through your IR3 tax return. This page explains how the rate works, the minimum and no-notification rates, and how to choose or change yours.
How contractor withholding tax works
If your work is a listed schedular-payment activity — contracting, freelancing in certain fields, company director fees, agricultural and forestry work, entertainment, modelling, and more — the payer must withhold tax from each payment and pass it to Inland Revenue.
You give the payer a completed IR330C — Tax rate notification for contractors for each source of contracting income. The standard rate for your activity is shown on the form. Withholding means you pay tax steadily through the year instead of facing one large bill, but it's not your final tax: you still file an IR3, claim business expenses, and get a refund or pay the balance.
Standard and minimum elected rates (IR330C)
The IR330C lists a standard withholding rate for each activity. You can instead elect your own rate to better match your expected tax, within these limits:
- The lowest rate you can choose without IRD approval is 10%.
- Non-resident contractors here on a temporary work or entry visa must use a minimum of 15%.
- To go below the 10% minimum, you must apply to IRD for a tailored (special) tax rate — for example if your expenses are high relative to income.
Choosing a rate close to your real marginal tax rate means you won't have a big bill or a large refund at year end.
The 45% no-notification rate
If you don't give the payer a completed IR330C (sections 1 and 3), they are legally required to withhold at the no-notification rate of 45% — far more than most contractors actually owe. The exception is non-resident contractor companies, where the no-notification rate is 20%.
Any over-withholding is refunded after your end-of-year assessment, but it ties up cash all year. The fix is simple: always hand over a completed IR330C before your first payment.
Choosing or changing your rate
To set your rate, download the IR330C from ird.govt.nz, follow the flow chart to find your activity's standard rate or pick your own (subject to the 10% / 15% minimums), complete sections 1 and 3, and give the form to whoever pays you.
You can change your rate at any time by giving the payer a new IR330C — useful if your income or expenses shift during the year. If you need a rate below the minimum, apply for a tailored tax rate through myIR and give the resulting certificate to your payer. Tell each payer whenever your details change.
Estimate your contractor tax
Use these free calculators to work out the tax on your contracting income and to compare contractor versus employee treatment.
Self-Employment Tax Calculator
Estimate income tax and ACC levies on your contracting income, after business expenses, to pick a sensible IR330C rate.
Contractor vs Employee Calculator
Compare take-home pay and tax treatment as a contractor receiving schedular payments versus a salaried employee.
Income Tax Calculator
Check the income tax brackets your elected schedular-payment rate should aim to match for 2025-26.
Related Terms
PAYE
PAYE (Pay As You Earn) is the system that New Zealand employers use to deduct income tax from employees' wages and salaries.
IRD
Inland Revenue Department (IRD), commonly known as Inland Revenue or simply IRD, is the New Zealand government agency responsible for collecting taxes, distributing social support payments, and enforcing tax compliance.
Tax Return / IR3
An IR3 is New Zealand's individual income tax return — an annual declaration of all your income, expenses, and tax credits filed with IRD.