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Self-Employment Guide — Tax Rules for Self-Employed Individuals in NZ

the self-employment tax rules in New Zealand. The guide covers the IRD definition of the self-employment, the registration requirements, the GST registration, the ACC cover for the self-employed, the provisional tax, and the annual tax return obligations.

Self-Employment Definition

The IRD defines the self-employment as the business activity where the individual is the "independent contractor" rather than the "employee". The factors determining the self-employment include: (a) the control over the work (the "when, the where, and the how"), (b) the risk of the profit and the loss, (c) the ownership of the tools and the equipment, (d) the ability to subcontract, and (e) the integration into the client's business. The self-employed individuals are not covered by the employment law (the "Holidays Act, the KiwiSaver auto-enrolment, the minimum wage"). The self-employed must register for the ACC CoverPlus.

Tax Obligations

The self-employed individuals must: (a) register for the IRD number and the GST if the turnover exceeds $60,000, (b) pay the provisional tax if the residual income tax exceeds $5,000 (the "three instalment dates" — the 28th of August, the 15th of January, and the 7th of May), (c) file the IR3 annual tax return showing the business income and the expenses, (d) pay the ACC CoverPlus levy based on the selected cover level and the industry risk, and (e) maintain the business records for the 7 years. See our Business Expenses Guide → for the deductible costs.