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.

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