If you trade as a company there is no problem in paying your spouse or partner wages through the payroll of your business – however if you trade as a sole trader or partnership (that doesn’t have your spouse / partner as an owner) you will need Inland Revenue approval to do this. If you don’t get approval Inland Revenue can disallow any wage payments from being a tax deduction for your business.
The type of information IRD will require may include:
Personal details of your spouse / partner
Nature of work they will be doing in your business
How much per hour and hours per week you intend to pay them for
Also if you wish to give your partner / spouse a pay rise you’ll be required to make another application to Inland Revenue!
Paying a partner or spouse can be a good way of shifting profit out of your own name but still into your family and paying less income tax. If you’d like to chat more about this please contact us – we’re happy to help.
