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Inland Revenue

Tax Policy

Announcements
PUBLISHED 1 March 2002

Requirements for non-resident contractors simplified

Withholding tax requirements for non-resident contractors will be simplified from 1 April, the Government announced today. Non-resident contractors will no longer have to apply for a certificate of exemption from withholding tax if they are eligible for relief under a double tax agreement and are here for less than 62 days in any 12 months. The measure was approved by Order in Council. For more information see the Government's media release.


Hon Paul Swain
Associate Minister of Revenue

MEDIA STATEMENT

Tax rules for non-resident contractors simplified

The Government has simplified the tax rules for hundreds of non-resident contractors who come to New Zealand to work for short periods each year.

Associate Revenue Minister Paul Swain says the government has removed an unnecessary requirement that has been creating compliance costs for both employers of non-resident contractors and the contractors themselves.

"At present payments to non-resident contractors are subject to a 15% withholding tax," Paul Swain said.

"Even if the person comes from a country with whom New Zealand has a double tax agreement exempting short-term contractors from paying tax here, they or their employer still have to apply to Inland Revenue for a tax exemption.

"This creates unnecessary compliance costs, and employers who ignore the requirement to withhold tax may face penalties.

"From 1 April, contractors who work in New Zealand for less than 62 days in a 12-month period and come from a country with whom we have a double tax agreement will no longer have to seek a certificate of exemption.

"We have double tax agreements with 26 countries.

"This is estimated to save time and bother for about 500 short-term contractors a year, as well as their employers.

"This measure was one of those proposed last year in the government discussion document More time for business, which looked at a tax simplification from the perspective of small business. Many of the submissions we received supported the proposal.

"Other simplification measures in the discussion document were included in the taxation bill now before Parliament, and the government is continuing to develop others," Paul Swain said.

Kerry Lamont - Press Sec for Paul Swain - 04 4719889/021 270 9106 / [email protected]
For other releases by Paul Swain: http://www.executive.govt.nz/minister/swain/index.html
For business information from the government: www-nzbusiness.govt.nz [site no longer available - see Internet Archive for archived version]