Explanation of Tax Types and Payee Types for New Zealand Payees

A payee’s tax type and payee type determine whether the payee is a direct employee or a contractor. There are two tax types that can be applied:

• PAYEE - this is used to designate a payee as a direct employee

• Contractor - this is used to designate a payee as a sole trader or a contractor who is working under the IRD number of a company.

For the PAYEE tax type there is only one tax type that is available, which is PAYEE. For the Contractor tax type the following payee types are available:

• Contractor - identifies the contractor as a sole trader who works under their own IRD number

• 3rd Tier Agency - identifies the contractor as a payee who has been sourced from another agency

• Umbrella - this is reserved for future use.