A
- ACC Acronym
- Accident Compensation Corporation — the government body that provides injury cover for all New Zealanders. Self-employed tradies pay ACC levies based on their trade and income. ACC covers accident injuries only — not illness or gradual-onset conditions. See our ACC Levy Calculator.
- AIM Tax
- Accounting Income Method — an IRD-approved method for calculating provisional tax payments in real time using your accounting software. Useful for tradies with fluctuating income, as you only pay provisional tax when you're actually profitable. Requires Xero, MYOB, or similar.
- Alternative Holiday Legal
- A paid day off in lieu owed to an employee who works on a public holiday. Under the Holidays Act 2003, if the public holiday was an otherwise working day for the employee, they earn an alternative holiday in addition to time-and-a-half pay.
- Adjudication Legal
- A fast-track dispute resolution process under the Construction Contracts Act 2002 for payment disputes. Either party can apply; a registered adjudicator makes a binding determination within 20 working days. Much faster and cheaper than court. The losing party must pay even if they intend to challenge the decision in court later. Common tool for tradies chasing unpaid progress claims.
- Apprentice Legal
- A trainee working under a structured training agreement (ITO) towards a trade qualification. Apprentices are employees — they're entitled to minimum wage, PAYE, KiwiSaver, and leave. Government subsidies (e.g., Apprenticeship Boost) may apply. See our Apprentice Wage Calculator and hiring guide.
- As-Built Drawings Contract
- Revised drawings prepared at project completion showing what was actually built — including any changes made during construction. Required by councils for consent sign-off on some projects. Important for future maintenance, renovations, or disputes about what was installed.
B
- Backcharge Contract
- A cost deducted from a subcontractor's payment because they failed to complete work properly, damaged other work, or caused additional costs. Principal contractors must usually give written notice before applying a backcharge. Disputed backcharges are common in the industry — document everything.
- BCA Acronym
- Building Consent Authority — the local council (or MBIE in some cases) that processes building consent applications, issues building consents, and conducts inspections. Every district or city council in NZ is a BCA. You apply to the BCA when your work requires building consent.
- Bill of Quantities (BoQ) Contract
- A detailed itemised list of all materials, labour, and work required for a project, with quantities and unit rates. Prepared by a quantity surveyor (QS) and used as a basis for tendering. Common on commercial and government contracts.
- Building Consent Legal
- Formal approval from a BCA (your local council) to carry out building work. Required for most structural work, new builds, significant alterations, plumbing, and drainage. Work done without required consent can result in fines and removal orders. See Do You Need Building Consent?
- Break-Even Rate Tax
- The minimum hourly rate you must charge to cover all costs without making a profit. Includes labour, overhead costs, tax, ACC, and non-billable time. Charging below your break-even means losing money on every job. Use our Breakeven Calculator to find yours.
C
- CCA AcronymLegal
- Construction Contracts Act 2002 — the main piece of legislation governing payment on construction contracts in NZ. Key provisions: right to make payment claims, right to suspend work for non-payment, adjudication process for payment disputes, and rules around retention money. Applies automatically to all construction contracts.
- Certificate of Practical Completion (CPC) Contract
- A formal document issued by the principal or architect when a project reaches practical completion. Triggers the start of the defects liability period and usually entitles the contractor to release of the first tranche of retention money.
- CU (Classification Unit) Acronym
- ACC's code system for assigning work levy rates. Each trade or occupation has a classification unit with its own levy rate based on historical injury statistics. Your CU determines how much you pay in work levies. Roofers (high-risk) pay significantly more than electricians (lower-risk).
- Contract Sum Contract
- The total agreed price stated in a contract before any variations. Every approved variation either increases or decreases the contract sum. The final payment reflects the original contract sum adjusted for all variations. Keep a running tally — disputes often arise from disagreements about what variations were approved and at what value.
- Cost-Plus Contract Contract
- A contract where the client pays the actual cost of labour and materials plus an agreed margin (e.g., cost + 20%). The client carries the cost risk — if materials cost more than expected, they pay more. Common in renovation or remediation work where scope is uncertain. Requires open-book accounting — clients should be able to see invoices and timesheets.
D
- Defects Liability Period (DLP) Contract
- A period after practical completion (typically 6–12 months) during which the contractor must return to fix any defects in their work at no charge. The principal contractor often holds retention money as security during the DLP. At the end of the DLP, retention is released (or should be).
- Depreciation Tax
- The reduction in value of an asset over time, which you can claim as a tax deduction. Tools and equipment worth over $1,000 must generally be depreciated over their useful life rather than claimed in full in the year of purchase. Use our Depreciation Calculator.
- Disputes Tribunal Legal
- A low-cost, no-lawyers court for resolving civil disputes up to $30,000 in NZ. Free to file. A referee hears both sides and makes a binding decision. Often used by tradies chasing unpaid invoices. For disputes up to $6,000, you can also use the simpler Small Claims process.
- Dayworks Contract
- Work carried out on a time-and-materials basis — typically for small extras or unforeseen scope that can't be priced upfront. Pre-agreed day rates and material markups should be in the contract. Always get the client or site manager to sign dayworks sheets on the day — unsigned sheets are hard to claim later.
- Domestic Building Contract Legal
- Under the Building Act 2004, any contract for residential building work over $30,000 (including GST) must be in writing and meet specific requirements — scope of work, price, payment terms, dispute resolution process, and insurance details. Failure to comply is an offence and can void your right to charge for variations.
E
- Earner Levy Tax
- One of three ACC levies paid by self-employed people. Covers non-work injuries (sport, car accidents, home accidents). Rate for 2025/26 is 1.33% of liable income, capped at the maximum liable earnings ($139,384). Collected with your income tax through IRD.
- Extension of Time (EOT) Contract
- A formal claim to extend the contract completion date due to circumstances beyond the contractor's control — weather delays, variations instructed by the client, or delays caused by other contractors. Must usually be notified in writing within a specified timeframe. Failure to claim an EOT on time can forfeit your right to it.
- Exempt Building Work Legal
- Building work that doesn't require a building consent under Schedule 1 of the Building Act 2004. Includes like-for-like replacements (taps, roofing iron), small garden sheds under 10m², internal non-structural work, and maintenance. Important: exempt from consent doesn't mean exempt from the Building Code — the work must still comply with code requirements.
F
- Fixed Price Contract Contract
- A contract where the contractor agrees to complete all work for a set price, regardless of actual costs. The contractor carries the cost risk — if materials or labour cost more than expected, that's their problem. Best suited to well-defined scope. Poorly defined scope + fixed price = disputes over what's included. Always define exclusions clearly.
- Flashing Legal
- Thin metal (usually aluminium, zinc, or steel) used to seal junctions and transitions in a building's weathertightness — around windows, roof penetrations, parapets, valleys, and wall-roof junctions. Faulty or missing flashing is one of the most common causes of leaky building claims in NZ. Classified as restricted building work (weathertightness category) requiring LBP involvement.
- Force Majeure Contract
- A contract clause excusing a party from performance due to extraordinary events beyond their control — earthquakes, floods, extreme weather, or pandemics. COVID-19 triggered widespread force majeure claims in NZ construction during 2020–21. Check your contract for what qualifies, what notice is required, and whether it suspends or terminates the contract.
- Formwork Contract
- Temporary structures (usually timber or steel) used to shape and support concrete until it cures. Includes shutters, props, and falsework. Formwork collapse is a significant construction hazard — WorkSafe has specific requirements for formwork over 1.5m. Removal ("striking" formwork) must only happen after the concrete has reached sufficient strength.
G
- GST AcronymTax
- Goods and Services Tax — a 15% consumption tax applied to most goods and services in NZ. GST-registered businesses collect GST from clients and pay it to IRD (less any GST paid on business expenses). You must register when your turnover exceeds $60,000 in any 12-month period. See our GST Calculator and GST registration guide.
- GST Return Tax
- A regular filing with IRD (monthly, two-monthly, or six-monthly depending on your turnover) reporting GST collected from clients and GST paid on purchases. The difference is either paid to IRD or refunded. Most small tradies file two-monthly.
- Gateway Test Legal
- IRD's set of factors for determining whether a worker is a contractor (self-employed) or an employee. Looks at: who sets the hours and methods; who supplies tools; whether the person works for multiple clients; whether they can subcontract; and whether they bear financial risk. Getting it wrong means the payer owes PAYE, KiwiSaver, and potentially ACC. See our Gateway Test guide.
H
- HSWA AcronymLegal
- Health and Safety at Work Act 2015 — the primary health and safety legislation in NZ. Requires all PCBUs (including sole trader tradies) to manage workplace risks so far as reasonably practicable. WorkSafe NZ enforces it. Key duties include providing safe systems of work, consulting with workers, and reporting notifiable events.
- Hazard Register Legal
- A documented list of identified workplace hazards, their risk level, and the control measures in place. Required under HSWA for construction sites. Should be reviewed regularly and updated when new hazards are identified. Some principal contractors require subcontractors to contribute to the site hazard register before starting work.
I
- IR3 Tax
- The Individual Income Tax Return form filed annually by self-employed people and those with non-PAYE income. Reports all income, allowable deductions, and calculates residual income tax. Due 7 July each year (or later with a tax agent). IRD uses the IR3 to calculate provisional tax for the following year — accurate deductions reduce your bill.
- IRD Number AcronymTax
- Your unique New Zealand tax identifier — an 8 or 9 digit number (e.g., 123-456-789). Required before starting work, registering for GST, or opening a business bank account. Businesses have their own IRD number separate from the owner's personal one. Apply at ird.govt.nz.
- Invoice Requirements Tax
- A valid GST tax invoice (for sales over $50) must include: your business name, GST number, invoice date, description of goods/services, total amount, and the GST component shown separately. Missing any of these means the client can't claim GST back. Use our free Tax Invoice Template.
J
- Job Card / Job Sheet Contract
- An internal record of work done on a job — who did it, hours spent, materials used, and any notes. Used to reconcile against quoted scope, build accurate invoices, and track job profitability. Most trade management apps (Tradify, Fergus, Fastcrew) generate job cards automatically. Paper-based job cards should be signed by the client on the day where possible.
- Joinery Legal
- Windows, doors, and associated timber frames manufactured off-site and installed as a unit. In NZ, external joinery is restricted building work (weathertightness category) — installation must be supervised or carried out by an LBP. Joinery specifications affect both energy efficiency (H1) and weathertightness compliance.
L
- LBP AcronymLegal
- Licensed Building Practitioner — a government licensing scheme for people who carry out or supervise Restricted Building Work (RBW). Managed by MBIE. Trades with LBP licensing include carpenters, designers, roofers, foundation workers, and external plasterers. Carrying out RBW without an LBP licence is an offence. Check the LBP register →
- Liable Income Tax
- The income amount used to calculate ACC levies. For self-employed people, this is generally your net profit from self-employment, capped at the maximum liable earnings each year ($139,384 for 2025/26).
- Liquidated Damages (LDs) Contract
- A pre-agreed daily or weekly penalty for failing to complete a project on time. Written into the contract before work starts. Designed to compensate the client for losses without needing to prove actual loss. Common on commercial contracts — check for LD clauses before signing.
- Labour-Only Contract Contract
- A contract where the contractor provides only labour — the client supplies all materials. Common in commercial fit-out, maintenance, and some residential work. Reduces the contractor's financial exposure (no materials to finance) but also reduces markup opportunity. Still requires a written agreement covering scope, rate, and payment terms.
M
- MBIE Acronym
- Ministry of Business, Innovation and Employment — the government ministry that oversees building regulation (Building Act, LBP licensing, building code), employment law, and business regulation in NZ. Resources at mbie.govt.nz.
- Markup vs Margin Tax
- Markup is profit added on top of cost (cost × markup % = sell price). Margin is profit as a percentage of the sell price. A 25% markup on $100 cost = $125 sell price = 20% margin. Tradies often confuse the two: applying a 25% margin instead of a 25% markup means undercharging by ~7%. Use our Markup vs Margin Calculator.
- Milestone Payment Contract
- A payment tied to completing a defined stage of work (e.g., 20% at slab pour, 30% at framing, 30% at lock-up, 20% at completion) rather than calendar dates. Aligns cash flow with progress and protects both parties. Typical for new builds and large renovations. Define milestones clearly in the contract — vague milestone definitions cause disputes.
N
- Notifiable Event Legal
- Under HSWA, a workplace incident that must be reported to WorkSafe NZ — including deaths, serious injuries (requiring hospitalisation), serious illnesses, or dangerous incidents (near misses with high potential). You must notify WorkSafe as soon as possible and preserve the scene.
- NZBN Acronym
- New Zealand Business Number — a unique 13-digit identifier for every NZ business. Free to obtain. Increasingly required when dealing with large clients or government entities. Register at nzbn.govt.nz.
- NZS 3910 Contract
- New Zealand Standard 3910 — the most widely used standard form contract for construction work in NZ. Covers payment claims, variations, extensions of time, dispute resolution, and practical completion. Often used as the base contract for commercial and government projects, with special conditions added. Understand it before signing — it's heavily weighted toward the principal.
O
- On-Costs Tax
- The employment costs on top of base wages: employer KiwiSaver contributions (3% minimum), ACC employer levy, and statutory leave entitlements (annual leave, sick leave, public holidays). On-costs typically add 17–25% to base wages. Must be factored into labour rates when pricing jobs or quoting subcontract labour. Use our Labour Cost Calculator.
- Overhead Costs Tax
- Business costs not tied to a specific job — vehicle running costs, insurance, phone, accounting fees, software subscriptions, tool maintenance. Tradies who only price labour + materials and forget overhead costs will earn less than they expect. Overheads must be spread across all billable hours in your hourly rate. Use our Hourly Rate Calculator.
- Owner-Builder Legal
- A homeowner who manages their own construction project, contracting individual trades directly without using a head contractor. Legal in NZ but the owner takes on PCBU duties under HSWA and must ensure all restricted building work is carried out by licensed practitioners. An owner-builder cannot sign off on their own restricted building work.
P
- PAYE AcronymTax
- Pay As You Earn — the system employers use to deduct income tax, ACC, and student loan repayments from employees' wages before paying them. As an employer, you're responsible for calculating, deducting, and paying PAYE to IRD each payday. Use our PAYE Calculator.
- PCBU AcronymLegal
- Person Conducting a Business or Undertaking — the broad HSWA term for any business entity or individual who runs a business, including sole trader tradies. As a PCBU, you have primary health and safety duties to workers (employees and contractors), and must manage risks so far as reasonably practicable.
- PC Sum (Prime Cost Sum) Contract
- An estimated allowance in a contract for a specific item whose exact cost is not yet known — typically materials or fittings the client will choose (e.g., tapware, tiles, light fittings). The actual cost replaces the PC Sum once the item is selected. Different from a provisional sum.
- Practical Completion Contract
- The point at which a project is substantially finished and fit for its intended use, even if minor snagging items remain. Triggers milestone payments, starts the defects liability period, and usually allows the client to take possession. The definition varies by contract — always read your specific contract's definition carefully.
- Principal Contractor Legal
- Under HSWA, the contractor in management control of a construction workplace. Has specific duties to manage and coordinate all PCBUs on site, including subcontractors. Must prepare and maintain a health and safety plan. Typically the head contractor on a project.
- Provisional Sum (PS) Contract
- An estimated allowance in a contract for work or supply that cannot be accurately priced when the contract is signed — typically because the scope isn't yet defined. Unlike a PC sum, a provisional sum covers work, not just materials. The actual cost replaces the provisional sum when the work is scoped and completed.
- Provisional Tax Tax
- Pre-payment of your expected income tax, paid in instalments during the tax year rather than one lump sum at year end. Required if you owe more than $5,000 in residual income tax (RIT) from the previous year. Three standard payment dates: 28 August, 15 January, 7 May. See our Provisional Tax Guide.
- Progress Claim Contract
- A formal payment claim submitted by a contractor for work completed to date, under the Construction Contracts Act. The party receiving the claim must respond with a payment schedule within the timeframe set by the contract (or CCA default of 20 working days). If no payment schedule is issued, the full claimed amount becomes due and payable.
- Payment Schedule Contract
- The formal response to a progress claim under the CCA, stating how much will be paid and providing reasons for any withholding. Must be issued within the contract's specified timeframe. Failing to issue one — even if you dispute the claim — means you must pay the full claimed amount. Don't ignore progress claims.
- Performance Bond Contract
- A financial guarantee (usually 5–10% of contract value) provided by the contractor's bank or insurer, guaranteeing the work will be completed. If the contractor defaults, the client can call the bond. Common on commercial contracts over $500k. Costs the contractor a fee (typically 0.5–2% of the bond value per year) to maintain.
Q
- QS (Quantity Surveyor) Acronym
- A professional who estimates and manages construction costs — preparing bills of quantities, checking contractor claims, managing variations, and certifying payments. On larger commercial projects, the QS acts as a financial controller for the project. On residential projects, owners sometimes hire a QS to check builder's invoices.
- Quote vs Estimate Contract
- A quote is a fixed offer to do work at a stated price — if accepted, it's a binding contract. An estimate is an approximate figure that may change. In practice the terms are often used interchangeably, but legally the distinction matters. Always clarify whether your figure is a fixed quote or an estimate subject to change. Use our Quote Builder Wizard.
R
- Residual Income Tax (RIT) Tax
- Your total income tax payable for the year minus any tax already deducted at source (e.g., from interest). If your RIT exceeds $5,000, you must pay provisional tax the following year. It's the key threshold to watch as a self-employed tradie.
- Restricted Building Work (RBW) Legal
- Building work that must be carried out or supervised by a Licensed Building Practitioner (LBP). Includes structural work, weathertightness work (roofing, cladding), foundations, and design work on houses and small buildings. Doing RBW without an LBP can result in fines and removal of the work.
- Retention Contract
- A percentage of each payment (typically 5–10%) withheld by the principal contractor or client as security that the work will be completed and defects rectified. Released in two tranches: first tranche at practical completion, second tranche at the end of the defects liability period. The CCA 2002 now requires retention money to be held in trust.
- RMA Acronym
- Resource Management Act 1991 — governs land use, subdivision, and environmental effects in NZ. Administered by local and regional councils. Relevant to tradies when work requires resource consent (e.g., large earthworks, work near waterways, or anything that could affect neighbours or the environment).
- Resource Consent Legal
- Approval from a district or regional council for activities that could affect the environment or neighbouring properties under the RMA — earthworks, subdivisions, work near waterways, or developments that exceed permitted activity rules. Separate from and additional to building consent. Can take weeks to months to obtain.
S
- Snag / Snag List Contract
- A list of minor defects or incomplete items identified during a final inspection before the client takes possession. Common term borrowed from UK construction. The contractor must typically rectify all snagging items before the final payment is released or before the defects liability period begins.
- Sole Trader Legal
- The simplest business structure — you trade under your own name (or a registered business name), and your business income is your personal income for tax purposes. No separate company, no corporate tax rate. Most self-employed tradies start as sole traders. See Sole Trader vs Company.
- Subcontractor Legal
- A self-employed person or business hired by the main contractor (not directly by the client) to carry out specific trade work. Subcontractors manage their own tax, GST, and ACC. Getting the contractor/subcontractor classification right is important — the IRD applies specific tests. See Contractor or Employee?
- SWMS AcronymLegal
- Safe Work Method Statement — a written document identifying hazardous tasks, the risks involved, and the control measures in place. Required for high-risk construction work under HSWA. A principal contractor may require SWMS from all subcontractors before they start work on site. Download our free SWMS template.
- Scaffolding Licence Legal
- A WorkSafe-recognised qualification required to erect or dismantle scaffolding over 5 metres high. Unlicensed scaffolding is a HSWA breach and a common enforcement target. The licence requires training with an approved provider. Scaffolding on a construction site is the responsibility of the principal contractor to ensure it's compliant.
T
- Tender Contract
- A formal competitive bidding process where multiple contractors submit fixed-price proposals for a job. The client issues tender documents (scope, drawings, conditions of contract); contractors submit sealed bids by a deadline. Common on commercial and government work. Being on an approved supplier panel is often required to be invited to tender.
- Terms of Trade Contract
- A written document setting out the standard commercial terms for your business — payment terms, late payment interest, ownership of goods until paid, liability limits, and dispute resolution process. Applies to every transaction unless specifically overridden. Download our free Terms of Trade template.
- Time and Materials (T&M) Contract
- A contract type where the client pays actual labour hours at an agreed rate plus actual material costs (usually with markup). The client carries cost risk. Best suited to undefined or variable-scope work (repairs, maintenance, investigation). Requires good record-keeping — dayworks sheets or a job management app. Always get T&M rates agreed in writing upfront.
- Trust Account Contract
- Under CCA 2023 amendments, retention money on contracts over $20,000 must be held in a separate trust account — it cannot be mixed with the principal contractor's operating funds. The money legally belongs to the subcontractor until the defects liability period expires. Breach of the trust account requirement is an offence under the CCA.
U
- Unit Rate Contract
- A pre-agreed price per unit of work — e.g., $X per linear metre of pipe, $Y per m² of painting, $Z per post hole. Common in civil, maintenance, and term contracts. Makes variations simple: just multiply units by rate. Dispute risk is low as long as units are clearly defined and measured consistently.
- Unfixed Materials Contract
- Materials delivered to a construction site but not yet incorporated into the works. Ownership can be disputed if the contractor goes into liquidation before installation. Check your contract for who owns unfixed materials — some contracts pass ownership to the client on delivery (and payment), others retain ownership with the contractor until fixed. Specify this clearly.
V
- Variation Contract
- A formal change to the original scope, price, or timeline of a contract — instructed and agreed by both parties. Variations must be documented in writing to be enforceable. Verbal agreements to vary the scope create disputes. Use our free Variation Order template.
- Void Contract Legal
- A contract that has no legal effect — as if it never existed. Can occur if a contract was entered into illegally (e.g., for unlicensed restricted building work), lacks consideration, or one party lacked capacity. Different from a voidable contract, which is valid until one party chooses to cancel it. Seek legal advice if you think a contract may be void.
W
- Warranty Legal
- A guarantee that work will be free from defects for a stated period. Under the Building Act 2004, contractors give implied warranties on residential work — that it will be done properly, materials will be suitable, and the building will comply with the Building Code. Express (written) warranties can extend these. Different from the defects liability period — warranties can run for years and may survive contract termination.
- Withholding Tax (WT) Tax
- A tax withheld at source by the person making a payment. For subcontractors, a payer may be required to deduct withholding tax (at 20% for tax residents with a certificate of exemption rate, or higher without). You apply to IRD for a withholding tax exemption certificate once your business is registered and compliant.
- WorkSafe NZ Legal
- The government regulator for workplace health and safety in NZ. Investigates workplace incidents, issues improvement and prohibition notices, and can prosecute businesses for HSWA breaches. Construction is a high-focus sector. WorkSafe can conduct unannounced site visits. Website: worksafe.govt.nz
- Working Safer Levy Tax
- The smallest of the three ACC levies — 0.08% of liable income. Funds WorkSafe NZ's activities. Collected through IRD with your other ACC levies.
Something missing? If there's a term you'd like added to the glossary, let us know.