NZ Construction Chart of Accounts for Xero: Schedular Payments + Retentions

Construction in New Zealand carries machinery a generic chart cannot handle, but it is different machinery from the United Kingdom. There is no construction reverse charge here. Instead the system runs on schedular payments, where tax is withheld at source from labour-only contractors, and on retentions held back until a job signs off. This is a New Zealand construction chart of accounts for Xero, with those accounts in place and GST set on every cost line. It comes as a readable reference CSV and a Xero import CSV.

Schedular payments, on both sides

Money moves to Inland Revenue before profit is ever worked out, and Xero needs accounts to track it in both directions:

• Schedular payments deducted (an asset): tax that contractors withhold from your labour-only invoices, which you later claim against your income tax. Without it, your income looks short and the withheld tax disappears.
• Schedular payments withheld (a liability): tax you withhold from subcontractors you pay, owed on to Inland Revenue.

A labour-only contractor completes an IR330C and chooses a withholding rate. If they do not choose one, the standard 20% rate applies, and you cannot go below 10% without a tailored tax rate certificate. The accounts give you somewhere clean to record each side; verifying the rate stays a process step.

The labour, materials and plant split

The chart replaces a single subcontractor line with three cost accounts: subcontractor labour, materials and plant and equipment hire. The split is not decorative. Schedular withholding bites on the labour element only, so labour has to be separable from materials on every invoice. All three are standard-rated at 15%, with materials carrying Zero Rated as the alternative for anything exported.

Retentions, tracked properly

Two more accounts handle money held back: retentions receivable (amounts your customers hold pending completion) and retentions payable (amounts you hold from your own subcontractors). Without them, debtors and creditors are overstated and the cash you are actually owed is hidden inside the contract value.

Tools and protective gear

The chart adds small tools, with a note that anything under the NZ$1,000 low-value asset threshold can be expensed immediately rather than depreciated, and protective clothing and PPE, standard-rated at 15% and fully deductible. Both keep site costs out of general overheads where they would be hard to review.

How to use it

1. Open the CSV: each account shows its class, a default Xero GST code, the other valid codes, and a note. The schedular and retention accounts are the construction additions.
2. In Xero go to Accounting, then Chart of accounts, then Import, and upload the CSV into a demo organisation first.
3. Confirm the five New Zealand GST rates exist in your organisation.
4. On every subcontractor invoice, keep labour and materials on separate lines so the schedular withholding calculates against labour alone.

The recurring work is keeping each cost coded and split correctly as the jobs roll in:

• Hubdoc pulls recurring merchant and plant-hire bills into the file.
• ExpenseFlow reads each receipt and bill, codes it to the right construction account at 15% GST, and posts it into Xero, so labour, materials and plant land where job costing expects them.
• Dext applies supplier rules for repeat materials suppliers.

One workflow point the chart supports but cannot enforce: before paying a labour-only contractor you should hold their completed IR330C and the chosen rate, because that sets the withholding. The accounts give you the structure; the verification is yours to run.

On QuickBooks instead? See the NZ construction chart of accounts for QuickBooks. For the full picture of schedular payments and provisional tax, see the New Zealand construction expenses guide.