Aro Accounting | Dealing with Contractors
948
page-template-default,page,page-id-948,page-child,parent-pageid-931,ajax_fade,page_not_loaded,,qode_grid_1300,footer_responsive_adv,qode-content-sidebar-responsive,qode-child-theme-ver-1.0.0,qode-theme-ver-10.0,wpb-js-composer js-comp-ver-6.6.0,vc_responsive
 

Dealing with Contractors

You're taking on a new Contractor - here's the information you'll need.

Contractors

 

Certain contractors will need to have withholding tax deducted from their payment, and the tax rate varies depending on the activity. Some common activities are:

 

  • Entertainers (New Zealand resident only) such as lecturers, presenters, participants in sporting
    events, and radio, television, stage and film performers, Modelling, Television, video or film: on-set and off-set production processes (New Zealand residents only) 20%
  • Agricultural contracts for maintenance, development, or other work on farming or agricultural land, Shearing or droving, Agricultural, horticultural or viticultural contracts by any type of contractor (not to be used where CAE code applies) 15%
  • Freelance contributions to newspapers, journals (eg, articles, photographs, cartoons) or for radio,
    television or stage productions 25%
  • Cleaning office, business, institution, or other premises (except residential) or cleaning or
    laundering plant, vehicle, furniture etc 20%

 

For a full list of activities and tax rates, see page 3 of the IR330C

 

  • If you are deducting withholding tax as per the IR330C, ask them to fill this out for you.
  • Find out if they are GST registered.
  • They should provide you with an invoice for each payment.

Processing their payment

 

If your contractor is not receiving schedular payments (as stated in the IR330C), or is not electing to have withholding tax deducted on a voluntary basis, then you can just pay their invoice as you would any other supplier.

 

If you are deducting withholding tax – we use the below methods for payday filing:

 

  • Xero Payroll – automatically payday files with IRD when payruns to the contractor are posted.
  • File manually with IR Online – Logging into MyIR and filing on screen in the Payroll account (must be done within 2 days of payment date).

 

It’s up to you whether you would like to process the payments yourself using Xero, or whether you’d like us to do it for you (we do not process the actual payments for you).

 

Payday Filing is required within 2 days of the payment, but the due date for payment of this withholding tax is on the 20th of the following month.

OUR DETAILS

 
Phone:

Auckland: (09) 282 3655
Mobile: 022 4 884 337

 
Postal:

PO Box 34980, Birkenhead 0746

Office:

37 Wilkinson Road,  Ellerslie, Auckland

 

DISCLAIMER: Of course a website can only talk in general terms, and is no substitute for specific advice. DO NOT ACT on comments made on this site without seeking professional advice first. We disclaim any liability for any loss or damage to you from the use of this site.
RESOURCES

We’re all about making your life easier. We have compiled some resources that will help you (and us) when it comes to tax compliance. Click on the links below to download the files.
 
End of Year Checklist
Important Due Dates
 

© 2021 Aro Accounting. All rights reserved.