Industry guidelines: Screen production industry
All payments made to you as an entertainer make up your gross (total before tax) income. This includes payments received to cover work-related expenses (allowable deductions).
You should receive an annual summary of earnings from us showing your gross earnings and tax on schedular payments (formerly withholding tax) deducted.
How are you taxed?
Initially, tax on schedular payments is deducted at a rate of 20% on your gross (total before tax) earnings. This includes all payments you receive as a resident entertainer, including per diems and accommodation allowances. You will need to fill out a Tax code declaration (IR330) form.
Is this the right level of tax for you?
As a resident entertainer, you may have expenses during the year that can be deducted against your end-of-year tax (these are called allowable deductions). In this case, you may want your tax rate lowered. If you don't have work-related costs, you may need to look at increasing your tax rate, so you don't end up with a large end-of-year tax bill.
To change your tax rate, you'll need to apply to us in writing, describing your circumstances. If you do need a change, we'll send you a special tax rate certificate detailing your new rate.
Does tax have to be deducted from schedular payments you receive?
Yes, unless payments for your services as an entertainer are made to a company or, as an individual, you have obtained an exemption certificate.
To get a certificate, your business activity or type of work must be listed on our Tax code declaration (IR330) form. You must also have a proven good record for filing returns and making payments.
You can apply for an exemption certificate by completing a Request for a certificate of exemption from tax on schedular payments (IR332) form and sending it to us. If you're granted one, you'll need to present it to your contract payers so they don't deduct tax from their payments to you. You still need to file an end-of-year tax return.
If you have a certificate of exemption, tax will not have been deducted from your income and you may be a provisional taxpayer.
Do you need to file a tax return?
Yes. The tax you pay goes towards your final income tax bill. You need to file an annual income tax return detailing your gross income and allowable deductions. This enables you to work out the tax on your taxable income and will determine how much tax you need to pay or be refunded, if any.
If you are providing entertainment services as a company, you'll need to file a Company tax return (IR4) or if you are providing entertainment services as an individual, you'll need to file an Individual income tax return (IR3).
What deductions can you make from your gross income?
There are a variety of allowable deductions for work-related expenses you can make from your gross income when completing your tax return. You must keep invoices and receipts as evidence to support all expenses claimed.
Will you need to pay provisional tax as well as tax on schedular payments?
If you owed more than $2,500 in tax at the end of the last tax year or you expect to owe more than $2,500 at the end of this tax year, you may be required to pay provisional tax.
Please note that having a certificate of exemption from tax does not remove any responsibility you may have to pay provisional tax.
Do you need to register for goods and services tax (GST)?
If your gross (total before tax) income, including per diems and allowances, was more than $60,000 over the last 12 months or is likely to be more than $60,000 over the next 12 months, you must register for GST.
What happens when you have an employee?
You must deduct PAYE from any salary and wages you pay to your employees.
Are you liable to pay fringe benefit tax (FBT)?
If you provide fringe benefits to your employees, you'll need to pay FBT.
What about my student loan?
No automatic student loan deductions are made from schedular payments you receive. You'll need to make repayments towards your student loan if your total income is over the annual repayment threshold.
Are you liable for Accident Compensation Corporation (ACC) levies?
Yes. You are responsible for paying your own ACC levies. You'll need to contact ACC for advice (you can view their website under our related websites section of our site.)
Date published: 04 Apr 2012