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Newsletter

12 June 2017

If you are a contractor already under schedular payment rules:
You must complete the new tax rate notification form (IR330C) when you start any new job on or after 1 April 2017. Tax rate notification for contractors form . On this form, you pick the rate you would like tax to be deducted at. New Zealand tax residents can pick any rate from 10% up to 100%. If you want to change your current tax rate, complete this form and give it to your payer so they can make the changes.

If you are a contractor that is hired and paid through recruiters:
The new rules apply to those contractors who find work through an employment agency or recruiter (also known as labour hire businesses). Labour hire businesses must deduct tax on your behalf from payments they make to you. This is the same whether you are self-employed, a sole trader or a company. Tax must be deducted from payments made to you on or after 1 April, even if the work was completed or the contract was entered into before this date.

You will need to complete the new tax rate notification form (IR330C) — ask your labour hire business for a copy, or download it here: Tax rate notification form . On this form, you pick the rate you would like tax to be deducted at. New Zealand tax residents can pick any rate from 10% up to 100%.

The benefit of choosing the right rate means you are less likely to have a tax bill at the end of the tax year. Use Inland Revenue’s new tool to work out what the best rate is for you and your circumstances: Tax rate estimation tool for contractors. If you complete the form but don’t pick a tax rate, the labour hire business will deduct tax at 20%. If you don’t complete the IR330C, the no-notification rate of 45% will be deducted.

New Zealand tax residents can't apply for a certificate of exemption for these payments, but you may be able to apply for a 0% special tax rate instead. This includes companies.

If you are a self-employed contractor:
If you work directly for any business and are not required to have tax deducted by the hirer, the new rules allow you to choose to have tax deducted from your payments.

Both you and your payer must agree to this approach. If you both agree, complete the new tax rate notification form (IR330C). Tax rate notification for contractors form . On this form, you pick the rate you would like tax to be deducted at. New Zealand tax residents can pick any rate from 10% up to 100%.

Keep a written record of the agreement. If you work for multiple businesses, each must agree to your request to have tax deducted. You’ll also need to give a completed IR330C form to each business. If a payer doesn’t agree, you must continue to pay tax for that work as you were previously.

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