Contracting in New Zealand can be both rewarding and challenging, especially when it comes to dealing with tax obligations. Registering with Inland Revenue Department (IRD) is one of the first steps contractors need to take to ensure compliance with New Zealand tax laws.
Here, we’ll take a closer look at contracting in New Zealand and what you need to know about registering with the IRD.
What is contracting?
Contracting is an employment arrangement where a worker provides services to a company or individual on a contractual basis. As a contractor, you have more control over your work schedule, the type of work you do, and the clients you work with.
However, as a contractor, you are responsible for paying your own taxes and ensuring you comply with tax and employment laws in New Zealand. This is where registering with the IRD comes in.
What is the IRD?
The Inland Revenue Department (IRD) is a government agency responsible for collecting taxes and administering New Zealand’s tax system. If you’re a contractor, you’ll need to register with the IRD and obtain an IRD number, which is a unique identifier for tax purposes.
Why do I need to register with the IRD?
There are several reasons why you need to register with the IRD as a contractor. Firstly, it’s a legal requirement. If you earn income as a contractor in New Zealand, you must register for tax purposes and obtain an IRD number.
Secondly, registering with the IRD can help you keep track of your tax obligations and ensure you pay the correct amount of tax. This is important as failure to comply with tax laws can result in penalties and fines.
Finally, registering with the IRD can also help you claim tax deductions and credits, such as expenses related to your work as a contractor.
How do I register with the IRD?
Registering with the IRD is a straightforward process. You can register online on the IRD website or by completing a paper registration form.
To register online, you’ll need to provide some personal information, such as your name, address, and contact details. You’ll also need to provide information about your business, such as the type of work you do, your business structure, and your expected income.
If you prefer to register by paper, you can download a registration form from the IRD website, complete it, and mail it to the IRD.
What else do I need to know about contracting in New Zealand?
In addition to registering with the IRD, there are other things you need to know about contracting in New Zealand. For example, you’ll need to keep accurate records of your income and expenses, including invoices and receipts.
You’ll also need to pay GST if your annual turnover exceeds $60,000. GST is a tax on goods and services and is currently set at 15%.
Finally, it’s important to ensure you have appropriate insurance coverage as a contractor. This may include public liability insurance, professional indemnity insurance, and income protection insurance.
In conclusion, registering with the IRD is an important step for contractors in New Zealand to ensure compliance with tax laws and to keep track of their tax obligations. By following the guidelines set out by the IRD, contractors can focus on their work and enjoy the benefits of contracting in New Zealand.