Agency and consultant expenses in New Zealand: imported services, schedular payments, home office

A New Zealand agency or consultancy runs on offshore software and freelance talent, and both carry a tax wrinkle that catches people out: when (and whether) to self-account for GST on imported services, and when a contractor payment is actually a schedular payment with tax withheld at source. Neither is the everyday assumption. All figures below are sourced from Inland Revenue guidance in the Sources section.

Imported services: usually no reverse charge for a taxable agency

Design tools, hosting, and ad platforms billed from overseas are imported services. The reverse charge under section 8(4B) requires a GST-registered recipient to self-account for GST on them, but only where the recipient makes more than a minimal level of exempt or other non-taxable supplies ^[1] .

So a typical fully taxable agency books the offshore invoice as a cost and does not reverse-charge it; a practice with exempt income should check. Either way the offshore invoice carries no New Zealand GST, so it is not an input-tax claim against the supplier invoice.

Schedular payments to contractors

Agencies pay contractors, and payments to contractors in certain activities are schedular payments with tax withheld at source. The contractor gives an IR330C and chooses a withholding rate; the standard rate applies if none is chosen ^[2] .

So a contractor invoice may not be a simple gross cost: it can carry a withholding obligation.

Home office, GST, and travel

Home office is claimable via Inland Revenue’s square-metre rate or actual-cost apportionment, as set out in the claim home office in New Zealand guide. A GST-registered agency charges 15% on its fees and registers once turnover passes NZ$60,000 ^[2] . Client travel follows the claim travel in New Zealand guide, and entertaining clients is limited to a 50% deduction with a matching GST adjustment.

Advertising spend and provisional tax

Paid media is the other large offshore line for most agencies: Google, Meta, and similar ad spend billed from outside New Zealand. As imported services these follow the same section 8(4B) logic as offshore software, so a fully taxable agency books them as a cost without reverse-charging, while a partially exempt one self-accounts. Where you on-charge media to clients, your fee and commission are your own taxable supply, separate from the pass-through media cost; keep the two apart so margin reporting holds. On the income-tax side, an agency that turns a profit moves onto provisional tax once its residual income tax exceeds $5,000, paying in instalments through the year rather than in one lump sum, which catches many growing practices by their second profitable year.

Where ExpenseFlow fits

An agency ledger is dominated by recurring offshore subscriptions and contractor invoices. ExpenseFlow captures each receipt and supplier invoice, extracts the line detail and currency, and syncs the transaction into Xero or QuickBooks Online with the source image attached for the seven-year record-keeping window. Its cross-border checks flag a purchase from an offshore supplier that has not charged New Zealand GST, so it is recorded as a foreign-currency cost rather than wrongly treated as carrying a claimable credit, and it surfaces the supplier and amounts your accountant needs to judge whether the reverse charge applies. It also flags contractor payments so the schedular-payment question is raised at capture. It does not decide schedular-payment status, withhold tax, or apportion your home office: those stay with you or your accountant. What it removes is the manual keying behind a busy subscription and contractor ledger.

Common mistakes

• Reverse-charging every offshore service when a fully taxable agency is generally outside section 8(4B) ^[1] .
• Treating an offshore SaaS invoice as carrying a claimable GST credit against the supplier invoice.
• Paying a contractor gross when the work is a listed activity requiring schedular withholding ^[2] .
• Leaving GST registration until after turnover has already passed NZ$60,000 ^[2] .