he NZ IRD has published Operational Statement OS 21/04 which clarifies the tax withholding obligation of non-resident employers (including from Australia) in cross-border employment situations.
A summary is as follows:
1. A non-resident employer has an obligation to withhold PAYE from a PAYE income payment and may have a FBT or Employer Contribution Superannuation Tax (ESCT) liability for a benefit provided to, or a contribution made to an employee if:
2. There is no PAYE withholding obligation if a PAYE income payment is “non-residents’ foreign sourced income” for the employee.
3. There is also no PAYE withholding obligation for a PAYE income payment made to a non-resident employee working in New Zealand if the domestic exemption in section CW 19 applies, or a Double Taxation Agreement gives relief from source taxation such as where the employee is in New Zealand 183 days or less in a twelve-month period.