If you’re a contractor or freelancer, you must fill out your IR330C or risk paying up to 45 percent of your income as tax.
What is an IR330C, who needs to fill it out, and why?
The IR330C is a tax declaration form for contractors issued by the IRD in New Zealand. Any person working as a contractor or freelancer who is providing services for the country’s large labour hire organizations must fill out and submit this form to the organization in order to get paid.
The term ‘labour hire’ refers to a company that has numerous contractors in its employ. The kinds of organizations under this umbrella range from recruitment agencies and big construction companies to film studios. It is mandated by law that they ask their contract employees to provide the requisite information on the IR330C form, or else they cannot pay them. If someone is contracting for multiple labour hire organizations, they will need to fill out a separate form for each one and submit it to the respective company.
Aside from the fact that the contractor won’t get their hard-earned pay, and it is the law, there’s another huge reason contactors should care about ensuring that they have properly filled out, signed, and shared this form with their employer. The purpose of the IR330C is to provide the employer with details of the rate of income tax that they should be paying to the IRD on the contractor’s behalf. If the individual doesn’t provide a correctly filled out IR330C, they will have to cut the tax at the highest slab, which could translate to up to 45 percent of their earnings.
A step-by-step guide on filling out the IR330C form
Understanding the language and steps involved will help you fill out your IR330C form easily and accurately. Download the IR330C form from the IRD website. You can either fill it out on your computer, or else print and fill in the details by hand. If you choose the former option, don’t forget to save the form as a PDF on your system. You have the option to share the completed form with your labour hire organisation either via email or else by turning it in at their office. There are three sections on the form, so make sure to go through and fill each one out carefully.
- Section 1 is where you provide your personal details – in this case, are your name and IRD number. Enter your full, legal name in the same format as registered with IRD. If you have an eight digit IRD number, leave the first box of the provided nine boxes empty and begin filling in your number from the second box.
- Section 2 is where you provide your chosen tax rate details. This could be basis the flowchart (as detailed on the next page of the IR330C form) but aside from a minimum percentage, you do have the choice as to what rate you’d like taken out for taxes from your wages, irrespective of the kind of work you are doing or your activity number.
For NZ residents the minimum requirement is 10 percent, while non-residents start at 15 percent. Those with an IRD exemption certificate are the only ones not subject to these minimums.
The second box under section 2 asks you to enter a schedular payment activity number. This number, which you will arrive at from the itemized list of numbers detailed on the table found on page 3 of the IR330C form. The prescribed activity number is basis the kind of service or work you are doing for the labour hire organization. The majority of contract workers usually find that activity number 19 is the best match, if they are residents, and activity number 15 if they are non-residents.
Entertainment professionals, for example have different numbers – models are ascribed 17, while those from film and television get 24. If you are in doubt, reach out to the concerned department or person at the labour hire organization you’re working with for clarity on which activity number is the correct fit.
- Section 3 is where you make your declaration. Here you provide your full name (do make sure it matches with what you entered in Section 1), and then enter your designation/title, signature, and the date of filling. In case you are an individual contractor or solo trading freelancer, you do not have to fill in the designation/title section. If you have filled out the form on your computer, you can use an electronic signature and save yourself the hassle of printing.
Things to keep in mind regarding the IR330C
- You must fill out the IR330C form by yourself and choose the tax rate for your income bracket and situation. Your employer should not, and cannot do this for you. They also cannot offer advice on tax rate.
- Holders of a certificate of exemption still need to fill out and submit a signed IR330C – they just get to choose a tax rate of 0 percent
- The taxes withheld are not all-encompassing. Aside from income/withholding tax, you may be liable for GST, ACC, or student loan repayments. Your chosen rate and your final earnings for the year are unlikely to be in perfect sync and you may well owe more (or at times even have overpaid). Being a contractor or freelancer, the onus to track and pay any additional taxes is on you.
- As a contract employee, your income is probably going to fluctuate over the course of the year, and this will affect whether you owe additional income tax or have had more than needed deducted by your labour hire employer.