MHK Chartered Accountants Update on Changes to Schedular Payments
Thursday 23 March 2017, 2:44PM
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The IRD have announced changes to the schedular payment rules that may change employer obligations, starting effective 1 April 2017. Ian Malcolm, Managing Director of MHK Chartered Accountants Auckland, comments that the most interesting one of these is the ability for Variable tax rates.
Mr Malcolm states, “Contractors will be able to choose their own tax rate, subject to a minimum. This has the potential to reduce tax that is currently being paid up front to the IRD, and improve cash flow for the contractor. If you use payroll software, your software should already be able to accept variable tax rates. If you are unsure, check with your software provider.”
He does however clarify that variable tax rates will not apply to non-resident entertainers and professional sports people visiting New Zealand. He continues, “To take advantage of this, contractors will need to complete a new Tax rate notification form IR330C, to confirm or change their tax rate. The new form will be used by contractors from 1 April 2017, instead of the existing Tax code declaration form IR330. The new form is now available on the IRD’s website”
This document is available at http://www.ird.govt.nz/forms-guides/number/forms-300-399/ir330c-tax-rate-notification-contractors.html .
In addition, Labour hire payments for contractors hired by, and who work for the client of, a labour hire business will be included in the schedular payment rules. Labour hire businesses include recruitment and on-hire companies. If you are a labour hire business, you will deduct tax when you pay these contractors. Contact MHK Chartered Accountants for clarifications on any particular circumstance or concerns you may have.
MHK Chartered Accountants are Auckland Chartered Accountants who specialise in business structuring and legally minimising all types of taxation obligations, and offer a no-obligation discussion free of charge. For more information on this, and MHK Chartered Accountants, see http://aucklandaccountant.net.nz .