The Goods and Services Tax Act 1985 has recently changed in relation to persons engaged as directors, chairpersons or members of local authorities or statutory boards, councils, committees or similar bodies. Two changes have been made:

1. When a person is engaged by a third party such as a board to be a director, board member, or a similar position, and the person is required to remit any payments received from the third party to their employer, the employer will be treated as supplying services to the third party. Therefore, the employer will return GST and the third party will be able to claim input tax on the payments.

2. When a person, in carrying on a taxable activity, accepts an office (ie, engagement) such as a director or board member who sits on a board, the person is required to account for the GST on any payments for their services to the board.

The changes apply from 30 June 2014.

More information is given on page 123 of the commentary to the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 and in the Tax Information Bulletin Vol 26, No 7 (August 2014) page 96.

With regard to withholding tax, work or services performed by statutory and non-statutory chairpersons or board members continue to be "schedular payments" and so are subject to withholding tax (at 0.33 tax rate) - unless that person holds a valid certificate of exemption (COE) or special tax code certificate (STC). In some instances the person may be under a fiduciary obligation to pass fees on to their employer, partnership or trust. Where this occurs the fees are considered to be earned by the employer, partnership or trust and if they hold a valid COE, STC or are otherwise exempt from the withholding regulations (for example, the employer is a company), the COE, STC or exemption will apply to that fee.

Soruce: http://www.ird.govt.nz/aboutir/newsletters/business-tax-update/2014/btu-issue-055-09-14.html#08