IT contractors - schedular payments and tax

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TinyTim

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#229061 5-Feb-2018 21:43

I figure there are probably a lot of IT contractors here who are affected by this.

I have accidentally discovered that payments made to contractors who work through an agency or recruiter are now (as of 1 April 2017) schedular payments, which means the agent has to deduct tax (20%). (See IR1029)

Are IT contractors here now having tax deducted by their agents, or is it by invoice as it always was?

Has anyone applied for a 0% tax rate?

dfnt

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#1952190 5-Feb-2018 21:54

Yep, contractors are having their tax deducted by agencies/recruiters/consultancy firms etc as they're (contractors) effectively labour for hire.

I have applied for the 0% tax rate, the process is easy, and received it so I continue with prov tax. Just reminded me that I received a renewal letter the other day so need to get onto that.

Quic referral link https://account.quic.nz/refer/276294 free setup code R276294EBWOBK

Geektastic

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#1952198 5-Feb-2018 22:25

My wife has to deal with this, although she is not an IT contractor she is a Change Management specialist.

The upshot for her has been that where the work comes through an agency, the tax is deducted and our accountants ensure that it is taken into account when dealing with Provisional Tax calculations. She took the view that it makes no odds and is easier than accounting for significant amounts of tax at the end of the year.

Where the client engages our company directly, no such tax is required to be deducted, which really just shows the inanity of the idea in the first place, but there we are.

TinyTim

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#1952205 5-Feb-2018 22:44

Looks like I need to send a polite query to my agent then!