Contracting in NZ

[meridian]

I think Robert Muldoon might have been right you know.

Don’t give me culture
I’m not hearing you Rob,
I could buzz around like a beehive boy
But I’d like to see you do my job

[Stan.goodvibes]

Don’t give me culture
I’m not hearing you Rob,
I could buzz around like a beehive boy
But I’d like to see you do my job

.... Up Front with The Knobz dododo do do do do

Classic!

[Stan.goodvibes]

So, are you saying you have to use a limited company or not then?

Sorry that might have been a tad ambiguous. Um I *think* you can set yourself up as a sole trader (like a sparky or plumber), but you still need a business bank account for agency/client to bank salary into. However the downside to Sole Trader is that after one year you have to pay provisional tax - 1/3 of the way into year 2 you have to pay 1/3 of the tax calculated on the previous years earnings, then 2/3 into the year you have to pay another 1/3 of the tax. So you work for a year, pay no tax upfront, then in year two you not only have to pay a whole years tax but also tax in advance for that year. NP if you put tax money aside, but who does that? I prefer to use that interest free loan from the IRD to do other things, and stay in tax arrears (using this years income to pay last years tax).

Better to go form a ltd co, do the GST thing every 2-6 months, take whatever you need/want as drawings, use the rest of the money to do things like buy BP shares which will double in the next year, and just pay tax 8 months after the end of the previous tax year - around August/Sept i think for a normal April 6 to April 5 tax year (or is it march 31?, I can't remember, my accountants do all that cr*p)

Crystal?

[Gonzo]

Crystal?

Oh yes.

Sorry that might have been a tad ambiguous. Um I *think* you can set yourself up as a sole trader (like a sparky or plumber), but you still need a business bank account for agency/client to bank salary into. However the downside to Sole Trader is that after one year you have to pay provisional tax - 1/3 of the way into year 2 you have to pay 1/3 of the tax calculated on the previous years earnings, then 2/3 into the year you have to pay another 1/3 of the tax. So you work for a year, pay no tax upfront, then in year two you not only have to pay a whole years tax but also tax in advance for that year. NP if you put tax money aside, but who does that? I prefer to use that interest free loan from the IRD to do other things, and stay in tax arrears (using this years income to pay last years tax).

Better to go form a ltd co, do the GST thing every 2-6 months, take whatever you need/want as drawings, use the rest of the money to do things like buy BP shares which will double in the next year, and just pay tax 8 months after the end of the previous tax year - around August/Sept i think for a normal April 6 to April 5 tax year (or is it march 31?, I can't remember, my accountants do all that cr*p)

The up-front tax payments thing is similar to how it is in the UK. It is a shock the first time it, but once you get past that it is no problem.

The difference is that higher rate tax payers in the UK have more tax to pay on the dividends that they pay themselves. In NZ they don't but the IRD have the power and the inclination to invalidate such arrangements if they believe that tax is being avoided. Tax avoidance cases back on table: IRD - Business - NZ Herald News Unlike the balls-up that was IR35 in the UK, the NZ IRD do have this power.