Annual Contract Value
$192,000.00
Contractor Net
$124,444.01
Employee Net
$130,105.57
Difference
-$5,661.56
GST Collected
$28,800.00
| Contractor | Employee | |
|---|---|---|
| Gross Income | $192,000.00 | $192,000.00 |
| GST Collected (15%) | $28,800.00 | N/A |
| Business Expenses | -$15,000.00 | N/A |
| Taxable Income | $177,000.00 | $192,000.00 |
| Income Tax (PAYE) | -$48,287.50 | -$53,957.50 |
| ACC Levies | -$4,268.49 | -$2,176.93 |
| KiwiSaver | Optional (not included) | +$5,760.00 (employer) |
| KiwiSaver (Employee) | N/A | -$5,760.00 |
| Net Take-Home Pay | $124,444.01 | $130,105.57 |
Contractor vs Employee in NZ
Contractors earn a gross amount and pay their own PAYE, ACC levies, and must charge and remit GST if registered (required over $60,000 turnover). Employees receive a salary with PAYE withheld, employer-paid KiwiSaver (3%), and ACC earner levy deducted.
Key Differences
Employees receive 4 weeks annual leave, 10 sick days, 11 public holidays, and employer KiwiSaver contributions. Contractors can claim business deductions but must fund their own leave, insurance, and KiwiSaver contributions are optional.
GST Considerations
If your annual turnover exceeds $60,000, you must register for GST and charge 15% on invoices. GST collected is remitted to IRD, so it is not income. You can claim GST credits on business purchases.
Business Expense Deductions
Contractors can claim tax deductions for legitimate business expenses including equipment, software, insurance, accounting fees, and a portion of home office costs. These deductions reduce your taxable income, lowering your overall tax liability.
IRD-Aligned: Uses 2025-26 NZ tax rates and ACC levy rates. This is a guide only -- consider seeking professional advice from a chartered accountant for your specific circumstances.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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