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As a non-resident contractor your tax obligations as an employer are outlined in this section.
A person, company or other entity who isn't a tax resident in New Zealand, and who has a contract, agreement or arrangement to perform a contract activity in this country, is classified as a non-resident contractor.
Some non-resident contractors fail to declare their New Zealand income and meet the PAYE requirements for their employees. Their employees also evade their tax obligations by not declaring their New Zealand income.
Any organisation in New Zealand that engages a non-resident contractor is required to deduct non-resident contractor's tax from the contract payments, unless the non-resident contractor provides an exemption certificate from us.
The tax consequences of failure to deduct this tax could substantially increase the costs to the organisation of engaging with the non-resident contractor.
If you engage non-resident entities or individuals to undertake contract activities in New Zealand, you must:
Non-resident contractors' tax (NRCT) is withheld from each contract payment made to the non-resident contractor at the standard or special tax rate. Payers must ensure that they hold a completed Tax rate notification for contractors IR330C on the non-resident contractor's behalf.
When the payer does not hold a completed IR330C, tax must be deducted, under section RD 10B(2) of the Income Tax Act 2007 (the Act), at the no-notification rate of 45 cents for each dollar for non-resident individual contractors, or 20 cents for each dollar for non-resident contractor companies.
If you are a non-resident contractor and work, lease or rent equipment you will have tax deducted from schedular payments income that is earned in New Zealand. Unless you hold a valid certificate of exemption from non-resident contractors' tax (NRCT) at the time payment is made, the payer must deduct tax from it.
If you are an entertainer performing in New Zealand, you are subject to tax on schedular payments of 20 cents in each dollar paid to you or any other person on your behalf. It does not matter whether you are an individual, company or other entity.