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Schedular payments made to certain types of contractors, attract a flat-rate of PAYE income tax, which is determined according to their status (ie, whether they are non-resident or not), as well as to the specific activity the individual is receiving payment for.

It is expected that contractors will complete the 'Tax rate notification for contractors', Form IR330C, notifying the hirer, by self-declaration, of the rate of tax to be deducted. As long as the self-declared rate is at least 10%, the hirer can deduct at this rate. Where the contractor is non-resident on a temporary work or entry visa, the rate must be at least 15%.

The Business.govt.nz page 'Introduction to taxes and levies', states that contractors can choose any rate of income tax from 10%–100%. The reason for the flexibility is to aid contractors in reducing their end-of-year tax bill, so essentially better managing their financial planning. The Inland Revenue provide a 'Tax rate estimation tool for contractors'