Recording the Contractor Tax Details

Contractor tax details apply to who are deemed as self-employed and therefore have a tax type of Contractor.

Once defined, a payee's contractor tax details can be modified if necessary so long as the payee is not currently included in an open pay batch.

However, once the payee has been paid (included in a closed pay batch) their contractor tax details, with the exception of the company address details, are locked down for the corresponding payee details validity period and cannot be modified for that period. If you need to modify a payee's company tax details after the payee has been paid in one or more pay batches, you must create a new payee details validity period.

How to Record the Contractor Tax Details

To record a payee's contractor tax details, follow the procedure below.

How to Record the Contractor Tax Details
	If you do not already have the relevant payee record open in the Payee Entry screen, search for and open the relevant payee record in edit mode.
2.	Navigate to the Payee Details > Contractor Tax Details section of the Payee Entry screen.
3.	In the Company Name field, key in the name of the payee's company.
4.	In the Business Name/Trading Name field, key in the registered trading name under which the payee's company operates. This may be the same as the company name
5.	In the IRD Number field, key in the unique number by which the Inland Revenue Department identifies the payee's company.
6.	If the payee is registered to collect Goods and Services Tax, click GST Registered.
7.	If the payee has their own insurance policy, click Insurance.
8.	If the payee is subject to schedular payments, click Schedular Payments and key in the applicable tax withholding percentage in the Withholding Rate field. Alternatively, if the payee is subject to schedular payments but has a valid certificate of exemption from withholding, tick Exempt from Withholding. Contractors can apply for a special tax rate of 0%. This is not the same as a certificate of exemption from withholding and therefore where a contractor has a special tax rate of 0%, a value of 0 should be keyed into the Withholding Rate field and the Exempt from Withholding field should not be ticked.
9.	If the payee is subject to schedular payments and/or is exempt from withholding, in the Tax Rate Notification/Exemption Expiry Date field select the date on which the payee’s current tax rate notification or withholding exemption certificate expires. If the payee is subject to schedular payments, it is not mandatory to select a date in the Tax Rate Notification/Exemption Expiry Date field unless the Exempt from Withholding field is ticked. If the payee is subject to schedular payments but has a valid certificate of exemption from withholding, the system will not withhold tax automatically once the exemption expiry date elapses. The exemption expiry date is captured so that payroll staff can use the Payee Maintenance > Payee Search > Payroll Details screen to search for payees with withholding exemptions that are due to expire. This allows you to request an updated certificate of exemption from those payees or, if a payee is not granted a further exemption, to create a new payee details validity period on the payee record that is configured not to exempt the payee from withholding (i.e. the Exempt from Withholding field is not ticked).
10.	If the pay company will cover the ACC employer levy liability on behalf of the payee, tick Apply ACC Employer Levy. Otherwise, skip this step if the payee covers their own ACC employer levy liabilities. In general, self-employed contractors cover their own ACC employer levy liabilities. If you tick Apply ACC Employer Levy, the system will calculate the ACC employer levy as a wage cost to the pay company on top of the payee's earnings.
11.	Optionally, key in the address details of the payee's company in the Company Address field grouping.
12.	At the top of the Payee Entry screen, click Save. The changes you have made are saved.