Non-compliance has been identified within the horticulture industry, particularly with contractors not meeting all of their tax obligations.
You may notice an increase in the Commissioner’s use of prescribed withholding rates for contractors operating in the horticulture sector. A prescribed withholding rate helps contractors pay the right amount of tax throughout the year and avoid tax debt.
We can issue a prescribed rate of schedular tax plus a prescribed percentage to be deducted from payments to contractors. The combined rate can be up to 50% of the payment. The prescribed rate of schedular tax applicable to the horticulture sector notices is 9% and the prescribed percentage rate will be either 21% or 31%.
The payer is required to declare the prescribed rate of schedular tax amount on their employment information as normal. The prescribed percentage is to be paid using the contractor's name and IRD number with ARR as the tax code.