Pay-as-you-go tax change for ‘gig’ workers

Esther Gillam used to gather up all the invoices for her part-time work over a year and work out how much tax to pay — a major headache for the fulltime student.

But a tax change has made it easier for the company she contracts through to pay tax on her behalf.

The Hamilton student works two contract jobs — and is part of the growing number of people doing a variety of “gigs” or jobs.

Gillam works six to eight hours a week helping a person with disabilities by doing housework and driving.

She combines that with contracting to her husband’s not-for-profit business and fulltime study in occupational therapy.

Before signing up to online care working platform MyCare she had to invoice the family directly and admits her record-keeping often made it tricky to work out exactly how much tax to pay at the end of the year.

On top of that was the challenge of finding the hundreds of dollars to pay the tax when it was due.

But now the company will pay some of her tax on her behalf.

“I think it can make a big difference. It depends on how many jobs you do.”

The record keeping side helped, she said. “While paying the tax is helpful you also need the records to meet your own obligations easily. It does help those less experienced in being out on their own.”

MyCare managing director Mark Jeffries said his business approached the IRD about its concerns around tax and its self-employed workforce about a year ago.

The company has about 3500 people who pick up work via its platform but does not employ them directly. At the same time about 2500 clients advertise work on the site.

Jeffries said many people were used to being employed and having their employer sort out their tax.

The firm already facilitated invoices and payments between workers and those that used their services and could make manual tax payments.

And now it can deduct 10 per cent from what the workers earn to pay their taxes.

While there is a risk some will underpay their tax, Jeffries said that was low because many care workers were low paid and worked part-time.

Paying some tax throughout the year was also better than facing a big tax bill at the end of the year.

Jeffries said the future of work was changing and many people were no longer just employed or contractors.

“There is this whole middle ground now.”