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Payroll News - 2005

Payroll News Issue 74 May 2005

Welcome to Payroll News

In this issue, we tell you about your responsibilities when hiring a labour-only contractor for the building industry, and when employing schoolchildren. We also answer your frequently asked questions and promote our INFOexpress service.

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.

Hiring a labour-only contractor in the building industry

If you hire a labour-only contractor they will fall under the withholding payments regulations. This means the contractor receives withholding payments instead of a salary or wage and you are required to deduct withholding tax.

You need to:

  • get a completed Tax code declaration (IR330) form from the contractor. The contractor must fill in their IRD number, use the WT tax code, and enter a withholding payment category of "labour-only contracts in the building industry".
  • make deductions from the withholding payments at a flat 20% rate. You don't deduct earner's levy or student loan repayments from withholding payments. If the contractor has not completed an IR 330 you need to make deductions at the no-declaration rate of 35%.
  • calculate the withholding tax on the GST-exclusive amount, if the contractor is registered for GST.
  • keep the tax invoices that the contractor gives you.
  • include the details of withholding payments on your Employer monthly schedule (IR348) and Employer deductions (IR345) form.
  • keep the withholding payments and the deduction records with your wage records.

    Note
    • If the contractor holds a special tax rate certificate, you should deduct withholding tax as specified on the certificate.
    • You don't need to deduct any withholding tax if the labour only contractor is a company or holds a current Certificate of exemption (IR331).

Questions we've been asked

Q If I have a new employee or an employee has ceased employment, what do I need to show in my employer monthly schedule (EMS)?
You need to include the start or cease date (whichever applies) on your EMS when the employee started or ceased working for you. You do not need to repeat the start or
cease date in subsequent EMSs for the same employee.

Q I have missed filing my employer monthly schedule (EMS)-what should I do?
If you have missed filing your EMS in any previous month, you will need to file a separate EMS(s) for the missed month(s). Do not include these details in your current month's EMS.

Q I have stopped employing. What do I need to do?
If you have no intention to employ in the future, please let us know by calling 0800 377 772. If you have temporarily stopped employing for a few months, you still need to file your Employer deductions (IR345) form and Employer monthly schedule (IR348) as "Nil" returns.

Employing school students

If you employ primary or secondary school students you deduct tax as follows:

Weekly earnings less than $20
Schoolchildren whose total earnings from all employment are less than $20 a week do not have to complete a Tax code declaration form (IR330). You don't need to deduct PAYE or earner's levy from their earnings or include them on your EMS. However, you still need to keep wage records for them.

Weekly earnings more than $20
Schoolchildren who earn more than $20 a week and/or whose annual earnings are not expected to be more than $1,040 do not need to fill in an IR 330. You don't need to deduct PAYE or earner's levy from their earnings or include them on your EMS.

Schoolchildren who earn more than $20 a week and/or expect to earn more than $1,040 a year must fill in an IR 330 and you need to deduct PAYE or withholding tax from the full payment. Children are entitled to a rebate of $156 each year if their income is over $1,040, see the Employer's guide (IR335) for more details.

Any employee who is at a tertiary institute is treated as an adult employee.

INFOexpress

INFOexpress is a convenient way to get in touch with us. Simply by phoning 0800 257 777, you have direct access to a range of automated services. Employers can use this service to:

  • check PAYE and gross running totals
  • check account balances
  • order a statement of account
  • get their total arrear balance.

Some of the services may require a personal identification number (PIN).

To order stationery (forms and guides) you can phone 0800 257 773.

You can get the latest versions of:

  • Tax code declaration form (IR330)
  • IRD number application - individual (IR595) form
  • 2006 Weekly and fortnightly PAYE deduction tables (IR340)
  • 2006 Four-weekly and monthly PAYE deduction tables (IR341)
  • Employer's guide (IR335)

This service uses the interactive voice response system (IVR) and lets you use your voice instead of keying in numbers on you telephone's keypad. It's also helpful if you know the number or name of any forms or booklets you are ordering. Have your IRD number handy.

For all other services you'll need to use a touch tone phone.

INFOexpress is available between 6 am and 12 midnight, seven days a week.

You can call these numbers for:

Forms and guides (IVR) 0800 257 773
Taxpacks 0800 257 772
All other services 0800 257 777


Kathleen Clement
Manager
Delivery, Planning and Initiation

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    Date published: 27 Apr 2005

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