The Covid-19 situation is evolving on a daily basis, and in these uncertain times, we know it’s important that our contractors know what options they have to help them through this period. Over the last couple of weeks, we’ve received queries from contractors all over New Zealand, asking about two things in particular: withholding tax and wage subsidies. With this in mind, we’ve put together a quick resource to keep you up-to-date and ensure you know exactly where you stand.
Withholding Tax Requirements
We can confirm that at this stage, the Withholding Tax deduction requirement (as per IR330c) is still applicable for contractors without an exemption certificate. As always, events are in a state of constant flux and the government may introduce new legislation that changes this.
So, what does this mean for our contractors? At this stage, Potentia is required to continue deducting Withholding Tax on behalf of our contractors. However, the IRD is providing economic hardship relief to individuals who are impacted by the Covid-19 situation and you may be able to request a refund of the Schedular Tax that you have made. This is of course subject to approval by the IRD as you must be able to demonstrate real economic hardship.
Tax Rate Certification
Regarding the tailored tax rate certification, you are able to apply for a Tailored Tax Code or Tailored Tax Rate. This is again subject to IRD approval and must still be provided to Potentia in order to reduce the Withholding Tax deducted.
Wage Subsidy FAQs
Has your income been affected by Covid-19? If so, as a contractor, you might be eligible for the Government’s Wage Subsidy Package. For more information on this, and how you can apply for it, Deloitte has outlined everything you need to know here! Hnry has also put together a list of FAQs for New Zealand's self-employed workforce on this topic, which may be a useful resource for you as well.
Still don’t have the answers you are looking for? We’re here to support you throughout the Covid-19 pandemic and beyond. Reach out to Ashley Grace for queries related to withholding tax, wage subsidies or any other concerns you might have.