What Is a Non-Resident Contractor Nz

You also don`t need to apply for an exemption certificate if the total contract payments you receive as a non-resident contractor from all your payers is $15,000 or less over a 12-month period. Non-resident entrepreneurs with annual sales of more than $60,000 may be required to register for the GST. Tax returns must be filed by non-residents who earn income from New Zealand (with the exception of dividends, interest income or New Zealand royalties, which are subject to final withholding tax). Deductions from earned income are covered by the Pay-for-Pay (PAYE) system. If a person with earned income is taxable, the employer has a PAYE source deduction. This could include situations where an employer is not a resident and no exceptions or relief apply, such as . B the 92-day and 183-day exemptions. Unless exempted, payers must deduct taxes on payments to non-resident entrepreneurs. An exemption from New Zealand taxation may be possible under a double taxation agreement. In general, New Zealand`s double taxation treaties provide for an exemption from income tax if the employee is present in New Zealand for 183 days or less, is employed by a non-resident company and the remuneration is not borne by a permanent establishment (PE) in New Zealand.

This page is intended for non-resident entrepreneurs who are self-employed. Non-resident entrepreneurs can claim a tailor-made tax rate that is higher or lower than it would otherwise apply. This may be relevant, for example, if the entrepreneur has other income or losses. A non-resident of New Zealand is generally a person who spends 183 days or less over a 12-month period in New Zealand and does not have permanent residence in New Zealand. A non-resident entrepreneur is a natural person who is present in New Zealand for more than 92 days in a tax year, provides services in New Zealand and payments are made by a New Zealand company to the non-resident entrepreneur for those services. Apply for an exemption as a non-resident entrepreneur Payments to the non-resident entrepreneur are called sedular payments. Payers usually have to deduct taxes from these payments and pay them to the tax administration on behalf of the entrepreneur. NRCT is deducted with a default rate of 15% on each contract activity or service payment. If the non-resident has not submitted the required tax return, the rate is 45% for natural persons and 20% for companies. the contractor provides a deposit or other security for the payment of income tax payable on an amount received from a contractual activity or service; or NRCT transfers responsibility for tax collection from the non-resident service provider to the New Zealand company that uses the service. Basically, NRCT operates as a provisional withholding tax, which is levied on the non-resident entrepreneur`s payments and paid to the tax office.

At the end of the tax period, the non-resident can file a tax return and claim a refund if excess tax has been paid, or in the event of a loss of income, it can be paid when filing the tax return. a non-resident entrepreneur receives an amount from a contractual activity or service that is not taxable, whether under a double taxation agreement or for any other reason; or you do not have to withhold tax if the non-resident entrepreneur: A non-resident employee can apply for an exemption from New Zealand tax if there is a permanent contract between New Zealand and the country where the employee is tax resident. The following conditions must be met to qualify for relief under the contract: A person`s obligation for New Zealand tax is based on residency status. A person can be a resident, a transitional resident or a non-resident for tax purposes. Extended business travellers are likely to be considered non-residents of New Zealand for tax reasons, depending on their personal circumstances. If the Contractor provides its services from outside New Zealand and has no presence in New Zealand, it is not a non-resident Contractor. There is no mandatory retirement savings in New Zealand. However, there is a government voluntary employment savings scheme called KiwiSaver, which is available to all resident employers, employers doing business from a permanent establishment in New Zealand or non-resident employers who choose the scheme. A non-resident contractor is a non-resident person, company or legal entity engaged to provide services, use the services of another person or use equipment in New Zealand. A transition resident is a new tax resident in New Zealand who has not been a resident for 10 years before arriving in New Zealand or returning to New Zealand. In short, some non-resident entrepreneurs will provide you with a personalized tax rate certificate that you received from the tax administration and that specifies the rate to be deducted. the contractor has paid all the income tax that the contractor is required to pay and has fulfilled its obligations under the Domestic Income Act during the 24-month period preceding the date of the application under subsection (2), and the Commissioner is satisfied that the contractor will continue to do so.

Employees, non-resident artists and athletes are not non-resident entrepreneurs. In other cases, a contractor must provide you with a completed IR330C tax rate notification. If this is not the case, you must use the non-non-emergency rate on page 3 of the form. Defined in this Law: Amount, Amount of Tax, Application, Taxable Income, Commissioner, Contractual Activity or Service, Contractual Payment, Double Taxation Agreement, Income Tax, Tax Laws, Non-Resident Contractor, Payment The rate is generally determined by the type of work performed and whether the Contractor has provided full notification of the IR330C tax rate for Contractors. The failure rate is currently 15%. Due to skills shortages or the need for specific expertise, New Zealand companies can often hire non-resident contractors for specific tasks. However, because it is difficult to track non-residents to file tax returns in New Zealand and is often not subject to withholding tax on services provided, the tax is levied by these service providers through the NRCT regime. You may have to deduct taxes from payments you make to non-resident entrepreneurs and pay them to the tax office. Our IR335 Employer Guide explains your obligations if you have to withhold taxes on a payment to a non-resident contractor. These are called sedular payments. Penalties may apply if you fail to meet your obligations.

A non-resident`s personal service income earned in New Zealand is exempt from New Zealand tax if all of the following conditions apply: Some non-resident entrepreneurs are exempt from withholding tax or may claim a tailor-made rate. A non-resident entrepreneur may apply to the Commissioner for an exemption under section 24H of the Tax Administration Act 1994 for a contractual payment made to him or another person acting on his behalf in the course of a contractual activity or service listed on the certificate for which no amount of tax is to be withheld. Non-resident contractors who employ staff or subcontractors may have additional obligations with respect to the payments they make. For more information on these obligations, see the Employer`s Guide – IR335. The exceptions listed above do not apply to public artists such as performing artists and professional athletes. You are subject to a maximum withholding tax (WHT) of 20%. Special rules apply to non-resident entrepreneurs. WHT must be deducted from payments to non-resident entrepreneurs who are not in possession of valid exemption certificates. The withholding tax is an intermediate tax that is deducted from the taxpayer`s final income tax. Non-resident entrepreneurs who reside in New Zealand for less than 92 days in a 12-month period and who are entitled to a full exemption under a DTA do not need to apply for an exemption certificate, although they may wish to do so in order to obtain a guarantee for the payer.

In addition, all payments received from a non-resident contractor if the total contract payments over a 12-month period is less than NZD 15,000 are exempt from the non-resident entrepreneur`s withholding tax (NRCT). For long-term business travellers who are not residents of New Zealand and who are not eligible for the above exemptions or reliefs, income generally taxed in New Zealand includes compensation for New Zealand-based employment and New Zealand income such as interest or dividends from New Zealand companies. Please note that the above article is intended to provide a general overview of the scheme, if you are a non-resident entrepreneur providing services in New Zealand or if you are a beneficiary of services in New Zealand from such an entrepreneur, contact our team of experts for specific advice on how to meet and manage your NRCT obligations. .