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New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Agents

HD 3: Agents’ duties and liabilities

You could also call this:

“Responsibilities and obligations of agents acting for others in tax matters”

When someone (called a principal) uses an agent to earn income, the agent has certain duties and responsibilities. These duties apply to all income the principal gets through the agent.

The agent must do the following things for their principal:

  1. Make any assessments that the principal needs to make.
  2. Provide all the tax returns that the principal has to give under the Tax Administration Act 1994.
  3. Pay the principal’s income tax.

There’s a special rule for agents who work for Lloyd’s of London, a big insurance company. These agents don’t have to do the things listed above for some types of income. Instead, they have different responsibilities, but only for certain things.

If there’s more than one agent responsible for the same tax, they all share the responsibility together.

The agent is treated as a separate person when it comes to taxes. They can only claim tax credits or exemptions that the principal is allowed to have.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517384.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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“Principal and agent are both responsible for paying taxes on the agent's work”

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HD 4: Treatment of principals, or

“Your tax responsibilities when using an agent”

Part H Taxation of certain entities
Agents

HD 3Agents’ duties and liabilities

  1. This section applies for the purposes of sections HD 8 to HD 27 in relation to all income derived by a principal through an agent.

  2. The agent must—

  3. make the assessments that their principal is required to make; and
    1. provide all returns required of their principal under the Tax Administration Act 1994; and
      1. satisfy their principal’s income tax liability.

        1. An agent described in section HD 17B(2) (Lloyd’s of London: agents for life insurance)—

        2. is not subject to subsection (2) for income derived under section CR 3B (Lloyd’s of London: income from life insurance premiums); and
          1. must meet the obligations described in section HR 13(3)(a) and (b) (Lloyd’s of London: life insurance) but only to the extent described in section HD 17B(3).

            1. If 2 or more persons are liable as agents in relation to the same tax, the liability is joint and several.

            2. The agent is treated in that capacity as a separate person, and may claim in relation to the agency income only those tax credits or exemptions to which the principal is entitled.

            Compare
            Notes
            • Section HD 3(1): amended, on , by section 81(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
            • Section HD 3(2B) heading: inserted, on (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 117(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
            • Section HD 3(2B): inserted, on (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 117(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
            • Section HD 3 list of defined terms business: repealed, on , by section 81(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
            • Section HD 3 list of defined terms New Zealand: repealed, on , by section 81(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).