It’s no secret that the New Zealand government has been cutting down on its workforce, both permanent employees, and contractors and consultants.
Unfortunately, for people who work in these sectors, this has resulted in an unstable job market, with not much relief in sight.
Hnry research reflects this disappointment, with 80% feeling the current Government has had no positive impact, and 67% not expecting any economic improvement over the next 6 months.
But there’s a silver lining: this uncertainty has created an opportunity for senior leaders to explore a new future-of-work model called Fractional Leadership.
Fractional Leadership is where you offer your time and expertise to companies at a fraction of a full time role. Unlike project-based gigs, these strategic leadership roles allow you to build a “portfolio career”, where you meaningfully contribute to a number of companies, but only for a limited duration and scope – typically, when your expertise is most needed.
It’s an industry on the rise across the world – there’s an estimated 9,000+ Fractional Leaders working in the US, and 20,000+ globally. In Aotearoa, there’s been a 13x growth in the number of people identifying as Fractional Leaders in the past 12 months alone.
Hnry has partnered with the Fractional Directory to help support and promote this new way of working. Here’s everything you need to know.
- What is Fractional Leadership?
- Why be a Fractional Leader?
- Getting set up as a Fractional Leader
- Tax obligations for Fractional Leaders
- Expenses Fractional Leaders can claim
- How Hnry and the Fractional Directory can get you started
What is Fractional Leadership?
So what exactly is Fractional Leadership? It’s work, but fractional (tada!).
Instead of working in a leadership role at a single company, you split your time across multiple companies simultaneously. In other words, you divide up your working hours, and offer fractions of your work week to different companies, depending on their needs.
Fractional Leaders tend to be industry veterans, who can help lead alongside a CEO or Founder. This means helping with a specific area of business – for instance marketing, technology, or finance, as the most senior leader on the team. Sometimes that can include leading an existing team, but it could also be about building a function from scratch.
The benefit for businesses is that they can better afford to hire the expertise they need, at a fraction (mind the pun) of the cost. It’s a huge win, especially for those at the start-up stage who need the help on a tight budget. They essentially invest in an expert who gets to know the ins and outs of their business, and whose role could potentially grow as they do.
For Fractional Leaders, if you enjoy variety, new challenges, and high-impact roles in companies, it can be a meaningful way to build out your long-term career path.
Why be a Fractional Leader?
There are so many benefits to moving from full-time into Fractional Leadership – we don’t even know where to begin.
Income diversification
The current unpredictability of the job market means that highly skilled people aren’t always finding the work they deserve.
Fractional Leadership is a way to safeguard against job loss by diversifying your efforts - meaning that even if you lose your position at one company, you’ll still have income from your work at another.
Flexibility
You can choose to scale up the number of companies you work for, or scale down, depending on your current needs. You can also potentially decide your own hours, in agreement with the company you work for.
Higher salary
Fractional Leaders are generally paid more by the hour than their fulltime employee counterparts, due to the nature of their work. Plus as sole traders (or sole-operator businesses), they can claim business expenses to help reduce their tax bill (but more on this in a bit).
Meaningful work
When was the last time you felt like you were making a real difference?
As a Fractional Leader, you get to use your expertise exactly how and where it’s needed. What more could you ask for?
Getting started as a Fractional Leader
Now we get to the good bit!
Becoming a Fractional Leader means deciding what your talents and specialties are, and offering them confidently to the world.
Firstly, think about what problems CEOs and Founders face that you have strong experience solving. What can you do in a week that would take someone less experienced months to do? Are there aspects of your leadership style that make you stand out in a team? Maybe you have specific industry expertise that could help solve specific growth issues? It’s all about your own track record, and where you can help people most.
Then, decide what category of business you want to specialise in – for instance sales, or sales and marketing. Or engineering and AI. This helps a company to understand where to place you in their organisational chart, and allows you to differentiate yourself from a consultant who wouldn’t hold the same level of responsibility.
Then, it’s time to start building your network. You could use a traditional tool like LinkedIn to grow your industry presence, share your skills, and approach businesses that might be a good fit to work with you. You could also tap your existing networks for business owners who need your immediate expertise to help them solve issues and grow their company.
Finally, make sure you’re putting yourself out there to get noticed. There are a number of Fractional marketplaces which help promote people to companies who are looking for pre-vetted, trusted leaders. Otherwise, if your title on Linkedin is “Fractional Leader”, you will likely already be listed in the Fractional Directory, and can build a detailed profile that allows companies to find you, based on your expertise.
Found work? Fantastic. You’re all set to go! But if you’ve never worked independently like this before you have a decision to make: offer your services as a company, or a sole trader. If you choose the latter, here’s what you’ll need to be across:
Sole trader taxes
Unlike a PAYE employee, Fractional Leaders generally have to sort their own taxes. That means calculating and setting aside their own:
- Income tax
- ACC levies
- GST (if applicable)
- Student loan repayments (if applicable).
Let’s look at each one in a bit more detail.
Income Tax
New Zealand uses a progressive tax system where different portions of your income are taxed at different rates rather than applying one rate to your entire income.
FY 2025/26 Tax Rates:
- $0 - $15,600: 10.5%
- $15,601 - $53,500: 17.5%
- $53,501 - $78,100: 30%
- $78,101 - $180,000: 33%
- $180,001+: 39%
For example, if you earn $80,000, your total tax would be $16,277.50. This is calculated by applying each tax rate only to the income within that specific band, so only $1,900 of your $80k income is actually taxed at the 33% rate.
💡 Your client or employer may deduct withholding tax at a flat rate (eg. 30% of all payments), which you’ll need to factor into your final calculations. For more information, check out our complete guide to withholding tax.
ACC Levies
You’ll need to pay three different ACC levies on your Fractional Leadership income:
- The Earner’s levy is a flat rate of $1.67 per $100 of liable income
- The Working Safer levy is $0.08 per $100 of liable income
- The Work levy varies by industry, based on the risk level associated with that job type.
💡 Your liable income is all income that falls between a minimum and maximum threshold, as set by ACC.
GST
GST is a 15% flat rate tax applied to most goods and services sold in New Zealand.
You must register for GST if you earn $60,000 or more in any 12-month period. Once registered, you’ll need to add 15% GST to your prices and collect this from customers, then forward this on to the IRD when you file your GST returns.
If you pay more GST on business expenses than you collect from customers in a GST period, you may be eligible for a refund.
Student Loan Repayments
If you’re paying off a student loan, the repayments are calculated at 12% of any income earned over the repayment threshold, which is set at $24,128 for FY 2025/26.
Expenses for Fractional Leaders
We mentioned it earlier, but as a self-employed Fractional Leader, you can claim business expenses to lower your taxable income, and therefore your annual tax bill. The most effective way to get as much tax relief as possible is to claim everything you’re eligible to claim.
That could include things like:
- Any equipment needed to perform your work
- Home office costs
- Mobile phone and internet costs
- Professional subscriptions
- Vehicle expenses, if you’re driving between client locations
Remember though (and we can’t stress this enough), you can only claim expenses for the business usage of any of the above. If, for example, your laptop is for work use 50% of the time, and personal use the rest, you can only claim the work percentage of the purchase cost – so here, 50%. You’ll also need to store your receipts for seven years, as required by the IRD.
💡 For more information about what you can and can’t claim, check out our explainer on expenses for self-employed workers.
Alternatively, you could use Hnry – raising expenses in our app is quick and simple, and we pass on the tax relief in real time. Plus, we store your receipts for you, so you don’t have to – it’s that easy.
How Hnry and the Fractional Directory support Fractional Leaders
Hnry has partnered with the Fractional Directory to make it easier than ever to navigate taxes and expenses when working as a Fractional sole trader.
The Fractional Directory operates as a business directory, listing all publicly operating Fractional Leaders in New Zealand. For Fractional Leaders who choose to build a detailed profile, their specific areas of expertise can be matched to Business Owners and Founders looking for help. The Directory is free for businesses to use, and its number one goal is to create more Fractional Leadership jobs, so Fractional Leadership as a way of working becomes a more viable, and sustainable career option for senior-level Kiwis.
Best of all, it’s a growing industry – when The Fractional Directory launched in September 2023, they mapped 43 total fractional leaders operating in NZ. Now, over a year and a half later they have 450 – and the numbers are growing every week.
On the back end, once you’ve found work, Hnry will automatically sort your taxes. For just 1% +GST of your self-employed income, capped at $1,500 +GST each year, we will calculate, deduct, and pay your:
Plus, we’ll also file your tax and GST returns, as part of the service. Basically, Hnry sorts all the admin so you can get on with the good stuff – your job.
Hnry is proud to support the Fractional Directory in helping more talented sole traders make the most of their incredible experience. Together, we’re making it easier than ever to build the career that works for you, on your terms.
Join Hnry today.
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