The main contractor’s clubs will use is a band.  Every member of the band is usually required to fill out an IR330 once and this should be kept on file.  If the band has an exemption certificate, make sure it is current and has their name written on it. It is good practice to take a copy of the certificate as well.

Withholding tax is deducted from payments made to people who aren’t employees but who are employed on a contract-for-service basis. If you hire contractors you may need to deduct withholding tax from the payments you make to them.

The main contract activities and the withholding tax rates are listed on the back of the Tax code declaration (IR330). This will need to be completed by the contractor. If they don’t complete an IR330, you need to deduct withholding tax using the no-declaration rate.

Withholding tax must be deducted from payments made to contractors unless any of the following criteria are met:

  • The type of work you’ve hired the contractor to do isn’t listed on the back of the IR330.
  • The contractor shows you their current certificates of exemption.
  • The work or services are completed by a company (but not a company that is a non-resident contractor or non-resident entertainer or involved in agriculture, horticulture or viticulture).
  • The payment is for a non-resident contractor who is eligible for total relief from tax through a double tax agreement and is present in New Zealand for a total of 92 days or less in any 12 month period.
  • The payment is to or for the contract activities of a non-resident contractor and they have been paid $15,000 or less in total from all payers in any 12 month period.
  • The work or services are completed by a public, local or Maori authority.

If your contractor is registered for GST they’ll charge GST on goods and services supplied. This means the gross earnings will increase by the amount of GST charged. If you receive a tax invoice, deduct withholding tax on the GST-exclusive amount.

Example
Commission $1000
Plus GST $125
GST-Inclusive amount $1125
Less withholding tax (20% of $1000) $200
Net Payment $925

You’ll need to deduct withholding tax from the $1000 and show the $1000 as the gross payment on the Employer monthly schedule (IR348 – PAYE form). Show a withholding tax (WT) tax code for contractors when completing the IR348.

More information on tax for bands and entertainers can be found in the IRD guide IR1035 which you can download using the link below;

Tax information for bands and entertainers - IR1035

If you have any questions please contact National Office on 0800 4 CLUBS or have a chat with your clubs accountant.