Tax
Withholding tax (contracting via an agency)
When an agency deducts income tax from your pay at source: turn it on per client, and Coffer records each deduction on the invoices you mark paid and credits it against your income tax ringfence. Covers the per-client rate, the automatic entries, and the year-end schedular-payments summary.
If you contract through a labour-hire agency, the agency usually deducts income tax from your pay before it reaches you and sends that tax to IRD on your behalf. This is withholding tax on a schedular payment. It's income tax you've already paid, just paid at source instead of by you later.
Coffer records that deduction so it doesn't ask you to set aside income tax a second time on money the agency has already handled. You can turn it on for each agency client, and Coffer records the withholding tax as paid as soon as you mark that client's invoice as paid.
Turning it on for a client
Open the client (the agency) and switch on Withholding tax deducted at source, then enter the rate they deduct at (the percentage from your IR330C, commonly 10 to 20 percent). Coffer saves it on that client.
Changing or removing the rate only affects invoices paid from that point on. Invoices you've already been paid for keep what was recorded, because the agency really did deduct and pay that tax. Set the rate on the clients that withhold; leave it off for clients who pay you in full.
What happens when you get paid
When you mark an invoice paid for a withholding-tax client, Coffer works out the tax deducted (your rate applied to the invoice amount before GST) and records it as income tax already paid. You don't log it yourself.
That amount is then credited against your income tax, so your income tax ringfence only holds what's still left to pay, not the part the agency already covered. Your “yours to spend” figure reflects it straight away. GST is unaffected: the agency withholds income tax only, so you still set aside the GST as usual.
At year end
Withholding tax is a credit on your tax return. Your total tax for the year, less the tax already deducted, leaves either a balance to pay or a refund. If the agency withheld more than your final bill, that difference comes back to you.
If you've shared access with your accountant, they can pull a Schedular payments summary, one line per agency showing the gross paid and the tax deducted, from the accountant area and the year-end tax pack. See inviting your accountant.
For the wider picture of schedular payments and how they fit your contracting income, see the guide on schedular payments.