{"id":969,"date":"2017-04-17T16:42:56","date_gmt":"2017-04-17T04:42:56","guid":{"rendered":"https:\/\/ontrackbookkeeping.co.nz\/?p=969"},"modified":"2021-01-19T23:04:47","modified_gmt":"2021-01-19T10:04:47","slug":"2017contractor-tax-changes","status":"publish","type":"post","link":"https:\/\/ontrackbookkeeping.co.nz\/2017contractor-tax-changes\/","title":{"rendered":"How do I get it right? New Contractor Tax Changes"},"content":{"rendered":"

Contractor tax changes<\/h2>\n
\n

(Information courtesy of Business.govt<\/a>) <\/em><\/p>\n

All contractors can have tax deducted from their pay at a rate of their choosing, and some MUST now do this. If you get it wrong, you might find your pay packet is 45% lighter than you expect.\"Contractors\"<\/a><\/p>\n

If their payer<\/strong><\/em> agrees, all contractors can now have tax deducted from their pay at a flat rate of their choosing. \u00a0All Contractors hired by a recruitment agency, or other labour hire business, must<\/em><\/strong> have tax deducted from their pay.<\/p>\n<\/div>\n

If you have tax deducted from your pay (voluntarily or compulsory), you will need to fill out the new tax rate notification form (IR330C) and give it to you the organisation(s) you contract to. New Zealand tax residents can pick any rate from 10% up to 100%.<\/p>\n

Check out the tax rate estimation tool on the IRD webite. \u00a0Tax rate estimation tool for contractors (external link)<\/span><\/a><\/p>\n

 <\/p>\n

Do I still pay provisional tax?<\/h3>\n

It\u2019s up to you. The tax rate you choose to have deducted from your pay will be a factor in whether or not you do.<\/p>\n

You only need to pay provisional tax if you\u2019re expecting to have an end-of-year tax bill of more than $2,500.<\/p>\n

If tax is deducted from your payments, you can reduce the chance of having an end-of-year tax bill by choosing a tax rate that better fits your circumstances. This could mean you no longer need to pay provisional tax.<\/p>\n

If you want to keep paying provisional tax but are now having tax deducted from your payments, you might be able to get a 0% special tax rate \u2014 fill out Inland Revenue\u2019s IR23BS form. This would allow you to continue paying tax as you have been before the rules changed.<\/p>\n

<\/h3>\n

<\/h3>\n

What if I pay too much \u2014 or too little \u2014 tax?<\/h3>\n

The same as always. If you pay too much, you\u2019ll get a refund from Inland Revenue.<\/p>\n

If you pay too little, you\u2019ll owe money to Inland Revenue and will get a tax bill. If your end-of-year tax bill is more than $2,500, you\u2019ll be expected to pay provisional tax the following year.<\/p>\n

Tax refunds (external link)<\/span><\/a> \u2014 Inland Revenue
\nIf you have tax to pay (external link)<\/span><\/a> \u2014 Inland Revenue<\/p>\n

What if I\u2019m paying off tax arrears?<\/h3>\n

Choosing a higher tax rate will not help clear your debt to Inland Revenue. You\u2019ll need to keep paying those arrears separately to the tax you have deducted from your schedular payments.<\/p>\n

Your options during financial difficulty (external link)<\/span><\/a> \u2014 Inland Revenue<\/p>\n

Does this change how I charge GST for my services?<\/h3>\n

No. When invoicing, continue to charge GST on your before-tax total. GST is a tax on goods and services paid by the business that hires you. It isn\u2019t a form of income tax.<\/p>\n

 <\/p>\n

Confused?<\/h3>\n

\"Confused\"<\/a><\/h5>\n

 <\/p>\n

If you would like to discuss your situation, feel free to contact the Ontrack Team<\/a> for a chat.<\/p>\n

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Contractor tax changes (Information courtesy of Business.govt) All contractors can have tax deducted from their pay at a rate of their choosing, and some MUST now do this. If you get it wrong, you might find your pay packet is 45% lighter than you expect. If their payer agrees, all contractors can now have tax … Continued<\/a><\/p>\n","protected":false},"author":12,"featured_media":7510,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[131,141],"tags":[],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"\nHow do I get it right? 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