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Determination: amount of a particular schedular payment (being per diem allowances paid in the screen production industry) that shall be regarded as expenditure incurred in production of payment

Introduction

This Determination sets out the amount regarded as expenditure incurred in the production of particular schedular payments when those payments are per diem allowances paid to resident and non-resident contractors and resident and non-resident entertainers working in the Screen Production Industry in New Zealand

Section RA (5) & RD 10 (1) of the Income Tax Act 2007 require anyone who makes a PAYE income payment to deduct tax when making it

Under section RD 3 (1-4) of the Income Tax Act 2007 a schedular payment is included in the definition of "PAYE income payments”. Consequently, any person who makes a schedular payment must deduct tax from it at the time it is made, unless an exemption applies

The Screen Production Industry pays per diem allowances to resident and non-resident contractors and resident and non-resident entertainers working on screen productions when they are working away from their town of normal residence. These allowances are to cover the costs of food as well as other minor incidental expenses in New Zealand

As per diems paid to resident and non-resident contractors and entertainers come within the definition of PAYE income payments, tax must be deducted from such payments

Section RD 8 (3) allows the Commissioner to determine an amount or proportion of any PAYE income payment that is considered to be expenditure incurred in the production of that payment. If the Commissioner has made such a determination, the person paying the particular schedular payment or class of schedular payments is only required to deduct tax from the amount of the PAYE income payment that exceeds this threshold (section RD 11(4) of the Income Tax Act 2007)

Application

This Determination applies to payments of per diem allowances made to resident and non-resident contractors and resident and non-resident entertainers in the Screen Production Industry. It applies:

  • to per diem allowance of $80 paid on or after 1st July 2018
  • except where any resident or non-resident contractor, or any resident or non-resident entertainer is also provided with the goods and services for which the allowance is paid by the payer or another party acting on the payer's behalf, and
  • until the Commissioner varies or revokes this determination.

Interpretation

In this Determination, unless the context otherwise requires, expressions have the same meaning as in Schedule 4 [Standard rates for tax for schedular payments] and sections RD 8 and YA 1 of the Income Tax Act 2007

Determination

Where any resident or non-resident contractor, or resident or non-resident entertainer receives a per diem allowance in relation to services provided to a screen production and that allowance is a schedular payment, the sum of $80 per day shall be regarded as expenditure incurred in the production of the payment. If the total amount of the payment is less than $80 per day, the total amount of the payment shall be regarded as expenditure incurred in the production of the payment

However, where the resident or non-resident contractor, or resident or non-resident entertainer is also provided with the goods and services for which the allowance is paid, either by the payer or another party acting on the payer's behalf, then no amount will be exempted by operation of this Determination from the application of the Income Tax Act 2007

This Determination is made by me, acting under delegated authority from the Commissioner of Inland Revenue under section 7 of the Tax Administration Act 1994

This Determination is signed on the 1st day of July 2018  

Tony Morris
Customer Segment Lead
Significant Enterprises Customer Segment

Examples

These examples apply to per diems which come within the definition of "schedular payment" in the Income Tax Act 2007.

Example 1

Contractor/entertainer receives a per diem allowance of $80. The goods and services for which the allowance is paid are not also provided by the payer or another payer acting on the payer’s behalf. The payer does not have to deduct tax because the total payment does not exceed $80 per day. The contractor/entertainer does not have to keep receipts.

Example 2

Contractor/entertainer receives a per diem allowance of $80. Contractor/entertainer is also provided with all meals while working, either on the set, or at some other location. The payer has to deduct tax from the per diem allowance of $80 as one of the matters for which the allowance is being paid is also being actually provided by the payer.

Example 3

Contractor/entertainer receives a per diem allowance of $80. The contractor/entertainer is also able to obtain food from a particular café adjacent to the set. The café is directly reimbursed by the production company. In that situation the cost of the food is met by the payer of the per diem and it is being physically provided on its behalf. The payer has to deduct tax from the per diem allowance of $80.

Example 4

Contractor/entertainer receives a per diem allowance of $100. The cost of the goods and services for which the allowance is paid are incurred by the recipient. The payer has to deduct tax from $20 of each daily payment as the payment exceeds the $80 threshold on a daily basis.