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MYOB Essentials

Contacts: GST registered subcontractors with withholding tax deductions

rgillespie
Cover User

3Posts

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3 Posts
Cover User
New Zealand

Hi there,

 

I'm setting up a client who employs subcontractors that are GST registered but also have withholding tax deducted from their wages payments.

 

Would it be possible to integrate the GST and Withholding tax calculation for this sort of subcontractor into the payroll module of live accounts instead of having to manually calculate the payment to be made to the subcontractor,  then manually having to account for the GST and split the corresponding payment?

 

Thanks

 

Rob

Current Status: Archived
Last Changed: September 2013

Hello Rob. Thank you for your suggestion. Our development team has reviewed this suggestion. At this stage this is beyond the scope of what we intend for Live Accounts. This may change at a later date.

8 Comments
Super Cover User TomOnTuesday
224 Posts
Super Cover User

They are either paying wages or are paying a contract payment on presentation of a tax invoice. These two separate issues should not be confused or conflated. It is also difficult to envisage a situation where one person could simultaneously be an employee and a contractor. That is why there are so many rules and guidelines on exactly this issue. Go back to the start and have the client check who and in what capacity they are paying these people.

rgillespie
3 Posts
Cover User

Hi Tom,

 

I don't think you quite understand what I'm trying to say here.

 

As per the IRD (http://www.ird.govt.nz/payroll-employers/make-deductions/withholding-tax/emp-deductions-salaries-wt-... schedular payments made to contractors are obliged to have withholding tax deducted at the prescribed rate even if registered for GST.

 

Therefore I want to be able to say that the contractor is registered for GST, have the payroll system work out the GST & Withholding tax amounts and perform the recquisite transactions.

 

For Example

A payment of $1,000 + GST to a contractor

Withholding tax @20% on this is $200, whilst GST is $150.

Therefore the pay run needs to generate a wage amount of $800, a PAYE amount of $200 and a GST amount of $150.00 which can be matched when the transactions come through the bank account.

Super Cover User TomOnTuesday
224 Posts
Super Cover User

Rob, OK I am not familiar with NZ tax requirements. I can see you are making a suggestion. I would think it is still counter-intuitive to be putting ANY contactor payments through a payroll system.

 

In your example, YOU have an expense that is $1,000 - if you use the GST code, MYOB will generate a gross amount of $1,150 (expense $1000, GST $150). What you are saying is you need MYOB to calculate 20% (of $1,000 or $1150). Probably what MYOB could have is a code for a % of withholding tax.

rgillespie
3 Posts
Cover User

HI Tom,

 

Your example would work fine. However in this case the contractors that the client is paying are contracting to him exclusively (I.e they are paid every month) and the client doesn't want to have to be manually filling out forms regarding PAYE which will be the case if the transaction isn't done through the payroll module.

 

In saying that, any way which cuts down the time it takes to record this type of transaction would be an improvement

MYOB Moderator Liam_M
3,488 Posts
MYOB Moderator
Hello Rob. Thank you for your suggestion. Our development team has reviewed this suggestion. At this stage this is beyond the scope of what we intend for Live Accounts. This may change at a later date.
mel_nee
8 Posts
Cover User

Hi, I have the exact same issue... has this been resolved yet?!?  As my client also employees timesheeted employees and we IRFile, we need to be able to put them all through payroll.

MYOB Moderator Steven_M
31,089 Posts
MYOB Moderator

Hi @mel_nee


Currently this idea has been marked as "Maybe Later'. This is due to the fact that subcontractors with withholding deductions is beyond the scope of MYOB Essentials going forward. At this stage we don't have plans to add it into the program however it maybe added later depending on the demand and scope of the idea.

We would recommend if you would like to pay sub contractors with withholding deductions via Payroll in New Zealand that you use MYOB Payroll. For Australian users you would be looking into AccountRight Plus

MYOB Moderator Steven_M
31,089 Posts
MYOB Moderator

Thank you for the idea. Unfortunately, this request has had little support from the community since it was submitted, so we are moving this idea to the Archived status. For more information on Idea Statuses, please read this article: Changes to our Idea Exchange pages