Wages or trade income

Compensation for work or service can either be wages or trade income. The tax obligations of the payer and the recipient depend on whether the payment is considered wages or trade income.

What are wages?

Wages refer to compensation paid for work carried out in an employment relationship. In these cases, the parties have signed an employment contract. Wages also include fringe benefits provided by the employer, such as:

  • car benefit
  • accommodation benefit
  • meal benefit
  • telephone benefit.

In addition, the following fees are considered wages even if there is no employment relationship: 

  • fee for attending a meeting
  • fee for giving a lecture or speech
  • fee for membership in an administrative body of a corporation
  • managing director’s fees
  • wages drawn by a partner in a general or limited partnership
  • compensation paid to a person in a position of trust.

See what obligations you have when you pay wages.

What is trade income?

Trade income is any such compensation paid for work or service that is not considered wages. Trade income is usually income generated by the recipient’s business operations.

Trade income may also be payments made to private individuals in compensation for individual tasks or occasional work, when there is no employment relationship between the payer and the recipient. For example, a lawyer may prepare a deed of estate inventory for their neighbour, or an accountant may take care of their hobby club’s accounting.

See what obligations you have when you pay trade income.