BLOG: Panic not – tax changes made easy

You may be affected if:

·         you pay or receive schedular (formerly withholding tax) payments

·         you are a labour hire business and you pay contractors or you contract to a labour hire business, e.g. recruitment company

·         you pay provisional tax

 Schedular payments

These were called withholding tax in the past.

Now, contractors who receive schedular payments can choose their own tax rate.

If you have a contractor that receives schedular payments and they want to change their tax rate, you’ll need to give them a tax rate notification for contractors (IR330C) form instead of the tax code declaration (IR330) form.

This also applies to new contractors.

The tax code declaration (IR330) form should only be given to salary or wage earners.

Labour hire businesses and their contractors

 If you pay contractors to do work for your clients under a labour hire arrangement, these payments now come under the schedular payment rules and tax must be deducted.

 Even if the work was completed before 1 April, 2017 – tax must now be deducted.

 Each contractor will need to complete the tax rate notification for contractors (IR330C) form to let you know what rate of tax should be deducted.

 Provisional tax

The use-of-money interest rules for provisional tax have been changed for most people.

The threshold for provisional tax has been raised from $50,000 to $60,000.

All in all, our head honcho thinks that the changes are pretty straightforward.

If you are using payroll software already, it should cope with variable tax rates.

If you need some help or advice, give your BUSINESS buddy a call and they’ll ensure your tax changes are correctly sorted.