Employing spouse in a sole trader business

[sandeep.nakarmi]

Hi,

I am an IT contractor working as a sole trader for few years now. I am looking at possibility to employ my wife to assist me, not for actual work itself, but to assist me in other works like an assistant managing my accounts, looking for jobs, maintaining my receipts for claims and communicate with accountant.

I've read from IRD that in order to employ a spouse, i need to get permission from IRD first. Will do that but want to know from others who have any experience in this area. This also comes from the fact that if i can employ my spouse, it will reduce amount of taxable income and save some amount being paid at high tax rate.

So what I am looking for is
1) How easy is it to get this done? and what would be IRD looking for to grant this?
2) Will I be able to employ her as both employee or self employed?

Any information will be greatly appreciated.

regards
sandeep

[Fern49]

Why is it necessary for you to contact the IRD to be able to employ your wife? On your information your wife would be deemed as an office worker or the likes.
Self-employed people generally find their own work rather than being provided with work by an employer, earning income from a trade or business that they operate.

[JandM]

The OP has evidently been checking up, and is quite right about the regulations. https://www.ird.govt.nz/payroll-empl...-staff/spouse/

Sandeep, if you follow what it says on that link, it looks as though it should be quite straightforward. The IRD will tell you how you need to record what you pay your wife for her employment.

[larrykiwi]

Alternatively make your spouse a partner in your business. This could possibly put both of you at a lower tax brackets.