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Inland Revenue

Tax Policy

PUBLISHED 21 October 2003

Changes made to NRCWT rules

Changes to the non-resident contractors' withholding tax rules were made yesterday by Order in Council, with effect from 1 December 2003. The changes extend the time — now 92 days — that contractors eligible for relief under a double tax agreement may work in New Zealand before they have to apply for a certificate of exemption, and exempt payments totalling less than $15,000 within a 12-month period. For more information see the government's media statement.

Hon Dr Michael Cullen
Minister of Revenue


Tax rules for non-resident contractors simplified

Tax rules on payments to non-resident contractors have been simplified with effect from 1 December 2003, Revenue Minister Michael Cullen announced today.

"The changes are designed to reduce compliance costs for both employers and contractors," Dr Cullen said. "They prevent employers having to go to disproportionate effort to withhold tax from small payments to short-term contractors who, in many cases, do not have to pay New Zealand income tax anyway.

"Contractors who come from a country with which New Zealand has a double tax agreement will have more time — 92 days rather than 62 days — before they have to apply for a certificate of exemption from withholding tax. This will save time and effort for all involved.

"As a complementary measure, payments for contract work amounting to less than $15,000 in a 12-month period will be exempted from non-resident contractors' withholding tax. Instead, contractors themselves will be responsible for paying any New Zealand tax owing at the end of the year," Dr Cullen said.

The changes were approved by Order in Council yesterday.

Contact: Patricia Herbert [press secretary] 04-471-9412 or 021-270-9013. E-mail: [email protected]