Examples of non-resident contractors working in New Zealand
Example 1
George is a sole trader architect who is a resident in Australia. He has been contracted by a New Zealand company* to provide plans of a new mall complex in New Zealand. George will be in New Zealand from 18 to 22 July (5 days) to discuss the mall requirements and again on 26 to 30 September (5 days) to present his plans. The plans are being prepared for A$150,000.
What are George's tax requirements?
| As George is a non-resident and ... | then he ... |
|---|---|
| does not have a fixed or permanent place in New Zealand | doesn't need to register for GST. |
| will be present in New Zealand for less than 92 days | has no income tax requirements in New Zealand. |
*Note
From 1 January 2005, the New Zealand company is required to account for GST on the transaction as an imported service. This is because the services would have been subject to GST if supplied in New Zealand and ensures that the New Zealand company does not obtain an advantage by sourcing the services from overseas.
Example 2
D & P Consultancy is an Australian-resident company. They have entered into a contract with a New Zealand-resident company to provide consulting and marketing research over a two-year period. D & P Consultancy will send two employees to New Zealand as follows:
- Employee 1 will be in New Zealand from 2 March to 2 April (32 days) for an initial consultation period and then again from 1 to 31 August (31 days) to oversee the beginning of the contract work.
- Employee 2 will be in New Zealand from 4 April to 21 December (262 days) initially. He will return to Australia for the Christmas break and return to New Zealand on 7 March the following year to complete the contract. He will return to Australia permanently on 25 October (233 days).
During this period, the employees will be paid their normal Australian salary by D & P Consultancy.
The contract's total worth will be NZ$1.5 million which will be paid in instalments over the length of the contract.
What are D & P Consultancy's tax and employer requirements in New Zealand?
| As ... | and ... | they will ... |
|---|---|---|
| D & P Consultancy have a permanent establishment in New Zealand |
|
|
| their annual turnover will exceed NZ$60,000 | be required to register and account for GST during their presence here. | |
| Employee 2 will exceed 183 days presence in New Zealand in any 12-month period | he will be deemed to be a New Zealand resident for tax purposes | be required to register as an employer and account for PAYE on their employee's income. |
Note
D & P Consultancy is considered to have a permanent establishment in New Zealand as their contract will last longer than six months, in accordance with the Australia/New Zealand DTA.
Date published: 17 Mar 2010
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