nz_schedular_payment_calculator
Work out the withholding tax on a New Zealand schedular payment to a contractor, and what the contractor is actually left with.
Use for: 'withholding tax on contractor payment', 'schedular payment tax
rate', 'IR330C rate', 'director fee tax NZ', 'what tax do I deduct from a
contractor', 'no IR330C what rate'.
TWO RULES CAUSE MOST OF THE TROUBLE.
WITHHOLDING TAX IS CHARGED ON THE PAYMENT EXCLUDING GST. A GST registered
contractor invoicing $1,000 plus GST bills $1,150, and the withholding is
charged on the $1,000. Charging it on the GST-inclusive figure over-deducts
by 15% of the tax every single time, and it is a common payroll error.
THE RATE DEPENDS ON THE ACTIVITY, NOT ON THE CONTRACTOR. Schedule 4 sets a
standard rate per listed activity. A contractor may elect anything between
10% and 40% on an IR330C. WITHOUT THAT FORM THE PAYER MUST DEDUCT AT 45%,
the no-notification rate, which is punitive by design and catches people who
simply never sent the paperwork back. If someone is being deducted 45%, the
fix is usually a form, not an argument.
THE DEDUCTION IS NOT A FINAL TAX. It is a credit against the contractor's
income tax for the year, so a contractor with deductible expenses usually
gets some back and one with a large profit usually owes more.
year_end_credit is the figure that goes in the return. Do not describe the
deduction as "the tax they paid on that job".
Args:
payment_excluding_gst: The fee BEFORE GST.
activity: Schedule 4 activity, which sets the standard rate.
rate_option: standard, nominated (an IR330C election), or no_form.
nominated_rate_pct: The elected rate, 10 to 40. Required for nominated.
gst_registered: Whether the contractor is GST registered.
Returns:
The invoice, the rate and why it applies, the tax deducted, the net to
the contractor, and the credit claimable at year end.
Input Schema
TableJSON Schema
| Name | Required | Description | Default |
|---|---|---|---|
| activity | No | standard_default | |
| rate_option | No | standard | |
| gst_registered | No | ||
| nominated_rate_pct | No | ||
| payment_excluding_gst | Yes |