Tax Obligations for Healthcare Contractors in New Zealand: What You Need to Know

As an independent healthcare contractor in New Zealand, you are responsible for managing your own tax affairs. Unlike employees who have PAYE deducted automatically, contractors need to understand their obligations around income tax, ACC levies, GST, and end-of-year filing. This guide covers everything you need to know for the 2025/2026 tax year.

You Are Not an Employee

When you work through TalentGrid, you are an independent contractor — not an employee of TalentGrid or the facility. This means:

• You control which shifts you work and when
• You can work for multiple facilities and platforms
• You are responsible for your own tax, ACC, and insurance
• You do not receive holiday pay, sick leave, or KiwiSaver contributions from TalentGrid

This is an important distinction. As a contractor, the tax system treats you differently from employees.

How Your Tax Works: Schedular Payments

Payments made to contractors in New Zealand are called schedular payments. When TalentGrid pays you for completed shifts, we deduct withholding tax at the rate you declare on your IR330C form and send it directly to Inland Revenue (IRD) on your behalf.

What is an IR330C?

The IR330C is a tax rate notification form specifically for contractors. You fill it out to tell TalentGrid what percentage of tax to withhold from your payments. Key points:

• The minimum withholding rate is 10%
• If you want a rate lower than 10%, you must apply to IRD for a tailored tax rate
• If you do not provide an IR330C, we must withhold tax at the no-notification rate of 45%
• You should use your individual IRD number (not a company IRD number)

What Gets Deducted vs What Doesn't

From your schedular payments, only income tax is deducted. The following are NOT deducted and are your own responsibility:

• ACC levies
• Student loan repayments
• KiwiSaver contributions

You will need to manage these separately through your own tax return or directly with IRD and ACC.

New Zealand Income Tax Rates (2025/2026)

For the tax year 1 April 2025 to 31 March 2026, the individual income tax brackets are:

Important: These thresholds were updated from 1 April 2025. The 10.5% bracket was extended from $14,000 to $15,600, and the 17.5% bracket was extended from $48,000 to $53,500.

Choosing Your Withholding Rate

Your ideal withholding rate depends on your total expected annual income from all sources. If you only work as a contractor and expect to earn $60,000 per year, a withholding rate of around 20-25% would be reasonable. However, if you also have PAYE employment income, you may need a higher rate to avoid a tax bill at year end.

Use the IRD estimation tool at ird.govt.nz to work out the right rate for your situation.

ACC Levies: Your Responsibility

As an independent contractor, you must pay ACC levies yourself. ACC provides personal injury cover from day one — this is called CoverPlus.

What ACC Levies Cover

ACC levies fund your injury cover if you are hurt at work or outside of work. As a self-employed person, you pay three types of levies:

1. Earners' Levy — A flat rate per $100 of liable income (currently $1.67 per $100 for 2025/2026)
2. Work Levy — Varies based on your type of work (healthcare roles have their own classification rate)
3. Working Safer Levy — A small flat rate per $100 of liable income

How ACC Invoicing Works

• You will usually receive your first ACC invoice after filing your tax return with IRD
• After that, you are invoiced once a year, usually in July
• You can pay in instalments
• From 1 April 2026, interest will apply to all instalment plans

Important Change for 2026/2027

The earners' levy rate is increasing to $1.75 per $100 of liable earnings from 1 April 2026.

GST: Do You Need to Register?

You must register for GST if your self-employed income exceeds $60,000 in any 12-month period. Key points:

• Only your contracting/self-employed income counts towards the $60,000 threshold — not any PAYE salary income
• You must register as soon as you think you will exceed $60,000 in 12 months
• You can voluntarily register even if you earn less than $60,000
• If registered, you charge 15% GST on your services and file regular GST returns
• You may be charged penalties if you should have registered but did not

If you are only doing occasional contract shifts and your total contracting income is under $60,000 per year, you likely do not need to register for GST.

Filing Your Tax Return

At the end of each tax year (31 March), you need to file an individual tax return (IR3) with IRD. Here is what to expect:

What's Automatic

The withholding tax deducted from your schedular payments is reported to IRD automatically. This means:

• Your schedular payment income appears in your myIR account
• The tax already withheld is credited to your account
• You do not need to keep track of individual payment slips

What You Need to Do

1. File an IR3 return — Declare all your income sources (contractor income, any PAYE income, investment income, etc.)
2. Claim expenses — You can deduct legitimate business expenses (see below)
3. Pay any tax owing — If your withholding rate was too low, you may owe additional tax
4. Receive a refund — If your withholding rate was too high, you will receive a refund

Expenses You Can Claim

As an independent contractor, you can claim deductions for expenses directly related to your work:

• Vehicle expenses — Travel between facilities (not regular commuting to one workplace)
• Professional registrations — Annual Practising Certificate (APC) fees, nursing council fees
• Professional development — Courses, training, conferences related to your role
• Professional indemnity insurance — If you hold your own policy
• Work-related clothing — Scrubs, uniforms, and protective equipment you purchase yourself
• Phone and internet — The business-use portion if you use your personal phone for work
• Home office — If you do administration work from home, you can claim a portion

Important: Keep receipts and records for all expenses. You can only claim expenses that are directly related to earning your contractor income.

Provisional Tax

If you owe more than $5,000 in residual income tax at the end of the year, you may need to pay provisional tax the following year. This is essentially paying your expected tax in advance in instalments throughout the year, rather than in one lump sum.

IRD will notify you if you need to pay provisional tax and will calculate the instalments for you.

Key Deadlines

Tips for Staying on Top of Your Tax

1. Set aside money for tax — Put 20-30% of each payment into a separate savings account
2. Choose the right withholding rate — Get it right upfront to avoid a big tax bill or tying up too much cash
3. Keep records — Track your income, expenses, and receipts throughout the year
4. Consider an accountant — A good accountant pays for themselves by ensuring you claim all eligible deductions
5. Use myIR — IRD's online portal lets you check your income, tax credits, and filing status anytime
6. Don't forget ACC — Budget for your annual ACC invoice (usually arrives in July)

Need Help?

• IRD Website: ird.govt.nz
• ACC Website: acc.co.nz
• Business.govt.nz: business.govt.nz — Free guidance for sole traders and contractors

This article is for general information only and does not constitute tax advice. Tax situations vary — consult a qualified accountant or tax advisor for advice specific to your circumstances.