Contractors refer to people who are not permanent employees of the business but are engaged on a contract-for-service basis to complete specific jobs. In New Zealand (NZ), the earnings made by contractors are known as Schedular Payments.‍

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Hurdles of Schedular Payments for NZ businesses‍

Schedular Payments are often more tedious and time consuming than regular payroll due to these aspects:

• Earners’ levy, KiwiSaver deductions and student loan repayments are not applicable to contractors
• GST must be included in the total schedular payment (where applicable)
• Contractors use a different tax code and have different tax rates applied compared to regular employees

Businesses thus either end up outsourcing contractor payroll to third parties which increases costs, or payroll administrators have to put in extra long hours to painstakingly process each contractor’s payroll separately and accurately. ‍

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The good news‍

With KeyPay’s new contractor functionality, NZ businesses can now process Schedular Payments alongside regular payroll, in a fuss-free way that saves them significant time and money in the long run. Additionally, businesses will also experience the convenience of having contractor data and employee data all stored under one roof for easy retrieval.

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About the functionality

The new contractor functionality makes schedular payments fuss-free in the following areas:

• Employee setup
  To minimise confusion on what details are required from contractors and to create a simpler onboarding experience, the new employee wizard has been enhanced to allow businesses the option of setting up a contractor. Where this is the case the rest of the wizard is then simplified to remove the fields that are not applicable for contractors.
  
  Businesses will be also able to nominate a tax rate for the contractor for any tax the contractor wishes to have deducted from their earnings. This enables businesses to cater to the various preferences of each contractor without the need for manual intervention. 

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• Pay run processing
  To ensure data accuracy and provide relief from manual calculations, we’ve added a “registered for GST” setting and where the contractor’s business is registered for GST, we will automatically calculate the GST applicable and include this in the pay run and pay slip.

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• Reporting
  Businesses will be able to utilise existing reports in KeyPay such as payment history and employee details to provide necessary information requested by contractors at the click of a button.
  
  
• Payday filing
  Businesses can submit their payday filing directly from KeyPay and this now includes submitting contractor information as per Inland Revenue Department’s requirements.‍
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• Expanded API library
  We have expanded our API library to include contractor functionality. This allows external third party systems the ability to interact with our APIs so that contractors can be set up in KeyPay automatically although the information has originally been added via another platform

We're excited to release this functionality which will make managing contractor payroll much easier each pay run. For more information on our contractor management functionality, check out these useful support articles: 

• Adding a contractor
• Paying a contractor