5. Services provided for 90 days or
less in a financial year

This exemption applies when an employer engages a contractor to provide services for no more than 90 days during a financial year.

Any amount of time worked in a day is counted as a full day and the days worked by the contractor do not have to be consecutive.

See section 32(2)(b)(iii) of the Payroll Tax Act 2007 (PTA).

For more details:

• Revenue Ruling PTA 035 v2 – Contractors: 90-day exemption sets out an approved replacement method for determining the application of the 90-day exemption where a principal contractor encounters difficulty in calculating the actual number of days that a contractor has rendered services in a financial year.
• Revenue Ruling PTA 014 – What constitutes a day’s work clarifies what constitutes a day’s work for the purposes of sections 32(2)(b)(ii) and 32(2)(b)(iii) of the PTA.

Examples

Exemption applies

A business that sells window blinds and shutters:

• employs full time installers, and
• engages an independent contractor for 1 day per week to:
  • undertake quality assurance work, and
  • fix faults for its customers.

The contract with the independent contractor is exempt because the contractor provides services to the business for less than 90 days in the financial year.

Exemption does not apply

A building company engages a bricklaying business to lay bricks. The bricklaying work is performed by John.

After working for 80 days, the building company ends its relationship with the bricklaying business, and hires John to lay bricks for 50 days in the same financial year.

As John performed the work under both contracts and worked for a total of 130 days during the financial year, this exemption does not apply to either contract.