Withholding tax processing

Withholding tax is typically a government requirement. The payer of income withholds or deducts direct tax from the payment and pays the tax to the government. Accounts payable withholding tax encompasses situations where amounts are held back from payments to the vendor and the payments are reported to the government.

New Zealand specifics

Withholding tax in New Zealand is known as schedular payments. A contractor must complete an IR330c form if they receive schedular payments, if they don't then a higher rate of tax will be deducted.

The flat tax rate differs depending on the occupation of the self-employed contractor.

The deduction will also need to be reported on the Employer Monthly Schedule filed with the IRD. This document has all the PAYE information on it; the WT code is used to identify deductions from self employed contractors.

Some contractors may have a Certificate of Exemption from Withholding Tax. If a contractor has this exemption, payments may be made without deducting withholding tax.

If the contractor is registered for GST, the amount of tax deducted is based on the GST inclusive figure.

How Infor meets this requirement

See the Payables User Guide.

See the Payables section in Financials Setup and Administration Guide.