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Government help for sole traders

If you’re a sole trader or contractor you may be entitled to government benefits and other programmes to help you when you’re starting out, paying tax and saving for retirement.

When you start out as a sole trader or contractor, ACC provides personal injury cover from day one. But you don’t need to pay for it until after you submit your first tax return.

ACC calculates your work levy based on your claims history.

ACC when you’re self-employed (external link) — ACC

The KiwiSaver scheme helps you save for retirement, whether you’re an employee, a sole trader or a contractor. It’s very flexible if you're self-employed — you can decide whether to join or not, and, if you do join, how much you’ll put in and when. You’ll need to join through a KiwiSaver provider of your choice.

If you put in at least $1,042.86 a year, the government will contribute a $521.43 tax credit. As a member, you can also take advantage of first home buyer benefits.

KiwiSaver if you’re self employed (external link) — KiwiSaver

There are several ways you can reduce your tax bill, including claiming expenses and getting a one-off discount for paying tax early. A good first step is to think about hiring a tax agent, eg an accountant — their knowledge can save you time and money.

Provisional tax early payment discount

You don’t have to pay your income tax until after the financial year-end on 31 March. But if you pay early in your first year of being a sole trader, contractor or in a partnership, you may be entitled to a 6.7% discount.

A tax advisor can help you to get the discount.

Early payment discount (external link) — Inland Revenue

Independent Earner Tax Credit (IETC)

The Independent earner tax credit (IETC) is an entitlement for individuals — including sole traders and contractors — who earn $24,000 to $48,000 after expenses and losses a year.

What you get

If your income is between:

  • $24,000 and $44,000 — you'll get $10 per week ($520 a year)
  • $44,001 and $48,000 — your entitlement will reduce by 13 cents for every dollar you earn over $44,000.

Depending on your income, you'll claim your IETC when you:

  • file an individual tax return (IR3)
  • request your personal tax summary (PTS).

If you have a tax advisor, ask them to help you do this.

Independent Earner Tax Credit (external link) — Inland Revenue

Expenses

Expenses are costs you incur in the day-to-day running of your business. At tax time, your profit is your taxable income minus expenses you can claim.

If you work from home, you can also claim for part of many of your household expenses — like mortgage interest, your phone line and your electricity bills. Check out our visual guide to see what you can claim for.

What to claim for when you work from home

From parental leave to KiwiSaver, claiming expenses to ACC cover for workplace injuries, take this quiz to find out what benefits are available. When you’re done, follow the links in the answers for more details. 

Becoming a contractor, sole trader or starting a business can affect any Work and Income benefits you get. If you get income support, your benefit payments usually stop when you start a full-time business, including going contracting. It may be different if you have a family, eg you may still get help with housing and childcare costs.

Ask your case manager how your income support will change and any extra help you may get.

Working for families

If you’re a sole trader, contractor or employee, Working for Families tax credits make it easier to raise a family while you’re working. It’s available to:

  • almost all families with children, earning less than $57,000 a year
  • many families with children, earning up to $74,000 a year
  • some larger families earning more.

To apply:

  1. Estimate your family’s income.
  2. Apply for the credit through the Inland Revenue website. 

How to estimate income and apply (external link) — Inland Revenue

Subsidies for pre-school and out-of-school care are available to many working parents. Contact Work and Income to find out if you’re eligible.

Working for Families tax credits (external link) — Work and Income

Childcare subsidy (external link) — Work and Income

Flexi-wage subsidy

Flexi-Wage for Self-Employment is a subsidy that you may be able to get when you want to start a business.

You may be able to get help if you:

  • or your spouse get government assistance, eg benefits
  • are not bankrupt
  • are a New Zealand citizen or permanent resident.

What you get depends on your financial situation and your business needs. Ask your Work and Income case manager about how to apply.

Flexi-wage (external link) — Work and Income

Self-employment (external link) — Work and Income

Parental leave

If you or your partner is having a baby or taking permanent responsibility for the care of a child under six, you may be entitled to paid parental leave.

What you get

If you’re self-employed, parental leave payments equal your average weekly earnings up to $527.72 a week before tax. The minimum payment is $152.50 a week before tax — if you earn less than this or make a loss, this is what you'll get.

How to qualify

You’re eligible for paid parental leave if you’ve been self-employed for at least an average of 10 hours a week for at least any 26 of the 52 weeks up to your due date or when the child comes into your care.

Your entitlement won't be affected if you stop being self-employed instead of, or while you’re on, parental leave.

Paid parental leave (external link) — Inland Revenue

Grants and funding

Business training and advice grant

This grant helps with the cost of training and advice, including using a business advisor when you want to start your own business. How to apply:

  • you or your spouse get government assistance
  • you’re a New Zealand citizen or permanent resident.
  • you are planning to take up, or are already getting the Flexi-Wage Self Employment subsidy.

How to apply (external link) — Work and Income

Grants and help for your new business


Capability vouchers

NZTE Capability Development Vouchers help business owners seeking to grow their business — including GST-registered sole traders — with the cost of developing and training in areas like:

  • planning
  • raising capital
  • export
  • finance
  • marketing.

To be eligible you’ll need to be assessed by a regional business partner (RBP). To access funding you need to talk to a Regional Business Partner Network advisor and meet the criteria, eg be GST-registered and a privately owned business. Talk to your local RBP to register your business and find out more.

Contact details (external link) — Regional Business Partner Network

Research and development (R&D)

There are R&D grants available to meet research and development needs of small businesses — whether you’re starting out, looking to grow or an established R&D performer. You can find out if you’re eligible for grants on the Callaghan Innovation website.

Callaghan Innovation also offers:

  • innovation skills programmes
  • help with research and technology 
  • access to innovation networks.

R&D Project Grants (external link) — Callaghan Innovation

R&D Getting Started Grants (external link) — Callaghan Innovation

Technology and product development assistance (external link) — Callaghan Innovation

Innovation skills programmes (external link) — Callaghan Innovation

Access to experts (external link) — Callaghan Innovation

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