Payroll News - 2005

Payroll News Issue 71 February 2005

• Do you employ contractors from overseas?
• Do you employ non-resident entertainers?
• Registration for online filing
• Child support deduction notices
• 2006 tax tables
• Provisional tax due date

Welcome to Payroll News

In this issue we inform you of the changes that apply to non-resident contractors, and we remind you about 2005 provisional tax due dates.

If you have an employer topic you'd like to see covered in this newsletter please write to the Editor, Payroll News , PO Box 2198, Wellington or email us at payroll.news@ird.govt.nz and we'll aim to cover the topic in a future edition.

Please pass this newsletter on to the person who deals with the payroll in your business.

Do you employ contractors from overseas?

Currently, if you employ contractors from overseas who are non-residents you need to deduct withholding tax on any payments you make to them at a rate of 15%. When no tax code is provided in their Tax code declaration (IR330) form, you need to deduct a no-declaration rate of 30%. This used to apply to all non-resident contractors.

What has changed?

Recent legislation has reduced the no-declaration tax rate for contractors who are companies only, from 30% to 20%.

The change applies to non-resident contractors who are companies only, not to non-resident contractors who are natural persons. The no-declaration rate of 30% is still required for contractors who are natural persons.

The change applies to payments made on or after 21 December 2004.

Do you employ non-resident entertainers?

Non-resident entertainers (including sportspersons, casual speakers or lecturers and commentators or comperes) are not required to have IRD numbers in order to work in New Zealand. If you employ a non-resident entertainer, you do not need to ask for an IRD number. Please also note that the no-declaration rate does not apply to them.

You need to deduct withholding tax from the amount you pay to them at the rate of 20% unless they have a certificate of exemption approved by Inland Revenue. Include these details on the Employer monthly schedule (IR348) along with any other PAYE and withholding payments deductions. The IRD number field should be completed with zeros and the letters "NRE" should be added before the entertainer's name.

If you also pay non-resident withholding tax to us, please do not include any withholding tax on an entertainer's income on the Non-resident withholding tax (IR67P) return.

If you need more information about non-resident entertainers or if non-resident entertainers require proof of their earnings, please contact the Non-resident Entertainers Unit by phoning 64 09 367 1329, or emailing nr.entertainers@ird.govt.nz or faxing 64 09 367 1397.

You can also write to:

Inland Revenue
Non-resident Entertainers Unit
Box 5542
Wellesley Street
Auckland

Registration for online filing

Everyone who employs staff must register as an employer with Inland Revenue. However, registration to file employer monthly schedules online is done separately for security reasons. Otherwise, anyone who obtained your IRD number (eg, from a tax invoice) could go into ir-File and view your wage records.

You can authorise as many staff as you wish to apply for the "File an Employer Schedule" (ir-File) service using your employer IRD number. Each one will have their own userID and password.

This user ID and password cannot be transferred to anyone else. That's why we recommend that you have more than one person registered for "File an Employer Schedule" (ir-File) service. Each new person will need to register as a new ir-File user using your employer IRD number. Registration and access to the service will not happen on the same day as the password may take up to 10 days to arrive.

If your employee is no longer working for you, their userID must be cancelled before leaving. As an employer you may also cancel your employee's registration at any time.

Child support deduction notices

We will send you (in mid-March) a new child support deduction notice for every employee you deduct child support for, who requires a change. This is because paying parents are reassessed for the new tax year starting 1 April.

Note

If you do not receive a new notice for an employee you must continue to deduct child support at the existing rate.

The new notice tells you when to make deductions for your employee and the amount to deduct.

Usually, we issue an individual notice for each employee you make deductions for. However, we can also send you deduction notices in the following formats:

• A consolidated deduction notice, which is a notice in schedule form showing all additions and changes to child support payments for multiple employees on the same schedule.
• Individual deduction notices and a consolidated deduction notice.

You may find it easier to process deduction notices if they are sent in one of the above formats. If you would like to change the format of your child support deduction notices please call us on 0800 220 222.

Note

Please remember that it is important to use the variation codes to let us know of any deduction variations for your staff and also to provide an end date for staff who have ceased employment with you.

2006 tax tables

Your PAYE deduction tables for the year ending 31 March 2006 will be posted to you in early March.

The rates in these tables will apply from 1 April 2005.

Provisional tax due date

For those who pay provisional tax and have a standard balance date of 31 March, your third instalment of 2005 provisional tax is due on 7 March 2005

You can make your payment:

• electronically through your bank
• by sending us your cheque and payment slip in the reply envelope
• by taking the payment slip into your nearest Westpac bank.

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Other issues this year

Payroll News Issue 81 December 2005
Payroll News Issue 80 November 2005
Payroll News Issue 79 October 2005
Payroll News Issue 78 September 2005
Payroll News Issue 77 August 2005
Payroll News Issue 76 July 2005
Payroll News Issue 75 June 2005
Payroll News Issue 74 May 2005
Payroll News Issue 73 April 2005
Payroll News Issue 72 March 2005

Date published: 23 Nov 2004

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