What is withholding tax on NZ contractor payments?

Some New Zealand contractors are subject to withholding tax (WT) — where the paying business deducts tax before making payment to the contractor. **When withholding tax applies:** Withholding tax applies to schedular payments — income from certain types of contracted work including: - Labour hire (working for a labour hire company) - Some professional services (accounting, legal, consulting in certain industries) - Commissions - Construction industry payments (in some cases) **WT rates:** Common WT rates for New Zealand contractors: - Standard rate: 20% (for NZ tax residents who provide an IRD number) - No-notification rate: 45% (if you don't provide your IRD number) - Lower elected rate: you can elect a lower rate (minimum 10%) if your expected income is lower **If WT is deducted from your payments:** - The payer provides you with a payment summary (withholding tax certificate) - You declare the gross income on your IR3 - IR credits the WT already deducted against your tax bill - If too much was withheld, you receive a refund Not all contractors are subject to WT — check with IR or your payer if you're unsure.

• Withholding tax applies to certain schedular payments
• Standard rate: 20% for NZ residents with IRD number
• No-IRD-number rate: 45%
• WT credited against your annual tax assessment
• Overpayment results in a tax refund