In New Zealand, there are differences in how Tax and KiwiSaver are handled for a Contractor as opposed to an Employee. As the employer, you must decide whether a person is employed as an Employee or a Contractor.
The Inland Revenue Department provides a lot of information on the differences between the two. Refer to the IRD website, www.ird.govt.nz, as a starting point. In particular, their Employer’s Guide (IRD335) and their pages on Employer responsibilities.
Two Radio buttons at the top of the Employees Taxation Details screen allow you to select between Employee and Contractor (Schedular Payments).
When Contractor (Schedular Payment) is selected:
The Tax Type defaults to Specify Rate and cannot be changed.
The Tax Scale Code field is disabled. Tax Code WT, which is used for contractor payments, will appear in the EMS file.
A rate from 0% to 100% can be entered in the Tax Rate field.
All checkboxes in the Student Loan section will be disabled.
Contractors are not set up with KiwiSaver funds or contributions. If the employee has a KiwiSaver fund and contributions, a message will be displayed when you click OK on the employee record, and you will not be able to save the record until the KiwiSaver fund is terminated.