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RD 7B: Treatment of employee share schemes
or “How employers handle taxes for employee share schemes”
You could also call this:

“Types of income payments classified as schedular payments and their exceptions”

A schedular payment is a type of income payment. It includes payments listed in schedule 4 and the net amount from a sale after subtracting expenses. It also includes unrepaid PAYE income overpayments treated as schedular payments under section RD 8B(2)(c).

Some payments are not considered schedular payments. These include:

  • Your salary or wages
  • Extra pay
  • Payments for services from public authorities, local authorities, Maori authorities, or most companies
  • Exempt payments mentioned in section 24H and schedule 5, part C, clause 6 of the Tax Administration Act 1994
  • Payments to non-resident contractors who don’t have to pay tax due to a tax agreement and are in New Zealand for 92 days or less in a year
  • Contract payments to non-resident contractors that total $15,000 or less in a year

Even if a schedular payment can’t be taken or given to someone else, the person making the payment still needs to take out tax.

The Commissioner can decide how much of your expenses count when you earn a schedular payment.

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Next up: RD 8B: Treatment of PAYE-related overpayments

or “How overpaid wages are handled for tax purposes”
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Part R General collection rules
Employment-related taxes: Types of PAYE income payments

RD 8Schedular payments

  1. A schedular payment—

  2. means—
    1. a payment of a class set out in schedule 4 (Standard rates of tax for schedular payments); and
      1. in relation to a sale, the net amount paid after subtracting from the purchase price all commission, insurance, freight, classing charges and other expenses incurred by the seller in connection with the sale; and
      2. includes an unrepaid PAYE income overpayment that is treated as all or part of a schedular payment under section RD 8B(2)(c); and
        1. does not include—
          1. salary or wages; or
            1. an extra pay; or
              1. a payment for services provided by a public authority, a local authority, a Maori authority, or a company, other than a non-resident contractor, a non-resident entertainer, a company in relation to a payment described in schedule 4, part J or part W, or an agricultural, horticultural, or viticultural company; or
                1. an exempt payment referred to in section 24H and schedule 5, part C, clause 6 of the Tax Administration Act 1994 applies; or
                  1. a payment for services provided by a non-resident contractor who has full relief from tax under a double tax agreement, and is present in New Zealand for 92 or fewer days in a 12-month period; or
                    1. a contract payment for a contract activity or service of a non-resident contractor when the total amount paid for those activities to the contractor or another person on their behalf is $15,000 or less in a 12-month period.

                    2. The fact that a schedular payment may be protected against assignment or charge does not override a person’s obligation to withhold the amount of tax for the payment.

                    3. The Commissioner may determine from time to time the amount or proportion of expenditure that a person incurs in deriving a particular schedular payment or class of schedular payments.

                    Compare
                    • 2004 No 35 s NC 21(f)–(h)
                    • Income Tax (Withholding Payments) Regulations 1979, regulations 2, 4, 6–8
                    Notes
                    • Section RD 8(1)(a)(i): amended, on , by section 89(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                    • Section RD 8(1)(ab): inserted, on , by section 254(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                    • Section RD 8(1)(b)(iii): amended, on , by section 89(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                    • Section RD 8(1)(b)(iv): replaced, on , by section 197(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                    • Section RD 8(1)(b)(v): amended (with effect on 1 April 2008), on , by section 506 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section RD 8 list of defined terms exemption certificate: repealed, on , by section 197(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                    • Section RD 8 list of defined terms unrepaid PAYE income overpayment: inserted, on , by section 254(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).