Posted on: Nov 24, 2016
If you thought working for food or accommodation was volunteering, think again. By law, anyone working in return for food and accommodation is an employee in accordance with section 6 of the Employment Relations Act 2000.
Under the Act, anyone who works for “hire or reward”, eg food and accommodation, is an employee in terms of the Act, which makes the person who is providing this food and accommodation their employer.
Giving people a feed and a bed for doing odd jobs is common in New Zealand, eg travellers working on farms (commonly known as “WWOOFers” which stands for “World Wide Opportunities on Organic Farms”). But if you’re going to engage in this sort or arrangement, then there are tax implications and employer duties you need to know about. Business.govt.nz has recently published an article about this issue on their website, and we thought it raised an important issue that was worth sharing.
Before they start
Before anyone can do any work, whether they are being paid them by wages or by providing food and a place to stay, make sure they’re allowed to work here. Only New Zealand citizens and permanent residents — and Australian citizens — can work in New Zealand without a visa. Everyone else needs one, eg a working holiday visa.
Also, volunteers will have to fill out Inland Revenue’s tax code declaration (IR330) and get an IRD number. Business.govt.nz has also provided a handy “to do” list for those who wish to engage workers in this way:
- register as an employer
- get a completed tax code declaration (IR330)
- check if they are eligible to join KiwiSaver and if they should be automatically enrolled
- create an employment agreement for a fixed-term or casual employee
- work out and deduct PAYE from any wages
- work out the PAYE on the market value of any accommodation you provide, or accommodation allowance you pay them
- keep records of income and deductions, eg a wage book
- file employer returns and pay PAYE to Inland Revenue.
This topic may come as a bit of a surprise to some people, so as always, feel free to contact one of our team members if you’ve got any questions about this.
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.