Calculators

Withholding tax on a schedular payment to a contractor

Work out the withholding tax on a contractor payment.

Two rules cause most of the trouble here.

The first is that 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, not the $1,150. Charging it on the GST-inclusive figure over-deducts by 15% of the tax every time.

The second is that the rate depends on the activity, not on the contractor. Schedule 4 of the Income Tax Act sets a standard rate for each listed activity, and a contractor may elect a different rate 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.

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 of it back, and one with a large profit usually owes more. year_end_credit is the figure that goes in the return.

post/v1/schedular-payments

Request

  • Base URL: https://api.calculate.co.nz
  • URL: https://api.calculate.co.nz/v1/schedular-payments
  • Auth: API key in header X-API-Key

Request body

payment_excluding_gstnumber required

The fee BEFORE GST. Withholding tax is charged on this, never on a GST-inclusive figure.

activity'company_directors' | 'public_office' | 'sports' | 'commission' | 'entertainers_resident' | 'modelling' | 'cleaners' | 'forestry' | 'horticultural' | 'shearers' | 'labour_hire' | 'entertainers_non_resident' | 'standard_default'

Schedule 4 activity, which sets the standard rate.

rate_option'standard' | 'nominated' | 'no_form'

'standard' uses the Schedule 4 rate, 'nominated' a rate elected on the IR330C, 'no_form' the 45% no-notification rate.

nominated_rate_pctnumber nullable

Elected rate as a percentage, 10 to 40. Required when rate_option is 'nominated'.

gst_registeredboolean

Whether the contractor is GST registered, in which case GST is added and received.

Example request

{
  "activity": "company_directors",
  "gst_registered": true,
  "payment_excluding_gst": 2000,
  "rate_option": "standard"
}

Response

Invoice, the tax the payer deducts, and what the contractor is left with.

disclaimerstring required

Scope and limits of this calculation.

Example response

{
  "disclaimer": "Withholding tax is charged on the payment excluding GST and is a credit against the year's income tax, not a final tax. Confirm the Schedule 4 activity and any elected rate on the IR330C. Not tax advice.",
  "result": {
    "gross_invoice": 2300,
    "gst_added": 300,
    "inputs": {
      "activity": "company_directors",
      "gst_registered": true,
      "payment_excluding_gst": 2000,
      "rate_option": "standard"
    },
    "net_to_contractor": 1640,
    "payment_excluding_gst": 2000,
    "rate_basis": "Schedule 4 standard rate for company directors and board fees",
    "withholding_rate": 0.33,
    "withholding_tax": 660,
    "year_end_credit": 660
  }
}

Changes

No recorded changes to this operation across all 1 revision of this API.