Contractors / Directors - Schedular Tax Deductions

Contractors / Directors - Schedular Tax Deductions

Contractor / Director Set Up (WT or Schedular Payments)

Notes
You make payments to them under a contract and can include certain activities, eg commissions, director fees or labour only contracts in the building industry.
GST can be payable, check if your contractor is registered for GST and add the element to the Timesheet Template.
They are not eligible for KiwiSaver or Leave Entitlements.
Withholding Tax is calculated on Whole dollars only and may differ to any calculations from a spreadsheet.
If you are amending an existing Employee (who previously had PAYE deducted) to a Contractor without tax or Withholding Tax to be deducted, we advise terminating (add Final Pay date) the employee record and setting up a new record for their contractor payments.
Contact our helpdesk for assistance.
Alert
Use the Pay Element CON – Contractor Payment when making payments not T1 Ordinary Time as any payments should not be included in ACC Earner Levy.
Info
For more information here IRD Schedular Payments
For more information here Employment NZ Contractor vs Employee
For more information here Payment Elements
For more information here KiwiSaver for Employers

Set Up a New Contractor 

  1. In People > Add Person
  2. Personal Details
  3. Complete name, address, start date, bank account, pay rates information, pay frequency and IRD number as per any other employee.
  4. Job Details
  5. Select N/A (Company/Contractor)
  6. Tax Details
  7. Select Tax Code  WT
  8. Advanced Tax Details
  9. Special Tax enter the % they require for their Withholding Tax to be deducted.
  10. If the contractor has a Tax Exemption Certificate.
  11. Select Tax Code  None
  12. KiwiSaver
  13. KiwiSaver Status is Not Eligible for KiwiSaver
  14. KiwiSaver Employee Rate is 0.00 %,
  15. Employer Contribution Rate is 0
  16. Employer Contribution Tax (ESCT) is 0% (No Employer Super).
  17. Save

Remove Leave Entitlements

  1. People > Timesheet Template
  2. Click on AL20 - Annual Leave (4 weeks pa)
  3. Remove
  4. Click on SICK-ENT
  5. Remove

Add GST to the Timesheet Template

  1. Enter 1 in the Green Qty Box
  2. Select the Element GST from the drop down menu.
  3. ADD
  4. Click on the GST Element to select a payslip format.
  5. Remittance Advice - Use if Contractor supplies the invoice to company
  6. Buyer Created Tax Invoice - Use if no invoice supplied to company

Timesheet Entry

  1. Enter 1 in the Green Qty Box
  2. Select Element CON – Contractor payment (not T1 Ordinary Hours) to pay them or set up a Pay Element for the Director Fee.
  3. Withholding Tax will be calculated on the WHOLE dollars
  4. GST will be calculated if required

Personal Details page

Job Details



Tax Details


KiwiSaver 



Remove Leave Entitlements



Timesheet Template Details


Add GST to the Timesheet Template 


 

 Remittance Advice 



Buyer Created Tax Invoice 

This is an invoice from the Contractor to the Organisation