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Uber Geek
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# 209139 14-Mar-2017 12:00
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My wife works on contract through a recruitment agency on long term projects (usually 12-24 months). The client pays the agency who pay her.


Yesterday she received an email from the agency informing her that taxation of contractors is changing and withholding tax must now be deducted at source. This was the first she had heard of it from either the agency or our accountants.


We already pay a hefty provisional tax bill and there is no mention in anything I can find that outlines whether contractors in her situation will no longer be paying provisional tax. If we have to pay both provisional tax AND withholding tax this seems both unfair and likely to cause significant financial disruption to us and probably to many other people.


We've asked the accountants for advice but I wondered if anyone here was working in the same way (as lots of IT people do) and whether anyone had seen any more information?

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Ultimate Geek
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  # 1739953 15-Mar-2017 16:57
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My accountant advised me that because I contract through my own company, and not direct, it's a business to business transaction as the income goes through my company.


So I continue under the prov tax regime.


He mentioned IRD is concerned about the amount of money being paid out to contractors shown in business tax returns, but not declared as income by the contractors in personal tax returns. So IRD is combating this by taxing at the source.



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