No Free Lunch says IRD!
It is common for people in our region to have volunteer helpers or WWOOFers staying, especially over the summer months. It is a happy arrangement for those looking to make their holiday money stretch a bit further while enjoying some real life Kiwi experiences, and the host families who get some much needed help at this time of year.
Unfortunately, there is another entity that may not have been invited to the party, but thinks they should be! Inland Revenue say that your volunteers are actually employees. The ramifications of this could be significant. This is what they say:
Is your volunteer actually an employee?
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.
Giving people a feed and a bed for doing odd jobs is common in New Zealand, eg travellers working on farms. But there are tax implications and employer duties you need to know about.
Before they start
Before anyone can do any work for you, whether you’re paying them wages or 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, your volunteers will have to fill out Inland Revenue’s tax code declaration (IR330) and get an IRD number.
Anyone who receives “gain or reward” for their work, eg food and accommodation, is in paid employment, which makes you their employer.
Your to-do list
For each volunteer you hire, you need to:
- 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.
Tell your insurance company you’ve taken on a new employee and want to add them to your policies.
This is to protect yourself in case something goes wrong, eg your volunteer gets injured while at work. It will likely cost you more, so you may want to contact an insurance broker for advice.
By law, any employee — including someone working for bed and board — has minimum rights, so make sure you understand them. It’s also your responsibility as their employer to protect employees at work.