New Zealand Self-Employed — IR3 Income Tax Return

Confirm the client is a NZ-resident individual (not a company, trust, or non-resident) filing for the correct tax year (1 April–31 March). Establish GST registration status, IRD number, and whether a tax agent extension applies. Identify any edge-case flags — Brightline property, FIF foreign shares, rental ring-fencing, or Working for Families — that require escalation before proceeding.

Collect all income sources: self-employment invoices or bank statement credits, schedular payment withholding certificates, interest, dividends, and any foreign income. For GST-registered clients, strip the 15% GST component from all gross receipts and expenses — the IR3 reports GST-exclusive amounts only. Gross up all schedular payments to their pre-withholding amount and note the withholding tax credit.

Classify all business expenditure against the IR3 expense categories: rent/workspace, utilities, phone and internet (at documented business percentage), software subscriptions, accounting fees, travel, motor vehicle, and other. Apply the 50% entertainment limitation and the 25% default motor vehicle cap (or actual logbook percentage where a 90-day logbook exists). Exclude provisional tax and GST payments — these are not deductible expenses.

Compute net taxable income (gross income less allowable expenses), apply the progressive rate schedule (10.5%–39%), add the ACC earner levy (~1.33% of liable earnings up to NZD 139,384), deduct the Independent Earner Tax Credit if applicable (NZD 520 for income NZD 24,000–44,000, phasing out at NZD 48,000), and subtract schedular withholding credits and provisional tax already paid to arrive at the Residual Income Tax (RIT) or refund. Flag if RIT exceeds NZD 5,000 — provisional tax is required for the following year.

For GST-registered clients, confirm that all GST returns for the tax year have been filed and that the GST liability or refund has been settled. Cross-check that the income figure used in the IR3 is consistent with the taxable supplies reported in GST returns. Identify any discrepancies — for example, income appearing in the bank statement that was not included in a GST return — and resolve before IR3 filing.

Transfer the finalised figures from the working paper into the IR3 in myIR (myir.ird.govt.nz). Enter self-employment income, schedular income (grossed up), allowable expenses, other income, credits, and provisional tax paid. Review the summary screen, confirm the RIT or refund amount matches the working paper, and submit. Note the terminal tax due date (7 February of the following year) and set provisional tax instalment reminders if required.