Relevant Contracts Tax
What is Relevant Contracts Tax (RCT)?
RCT applies to payments made by a principal contractor to a subcontractor under a relevant contract (this is a contract to carry out, or supply labour for the performance of relevant operations in the construction, forestry or meat processing industry). RCT applies to both resident and non-resident contractors operating in the construction, forestry or meat processing industry.
RCT is a tax deduction system whereby a principal contractor:
- Deducts tax at 35% from payments to subcontractors for whom the principal contractor does not hold a relevant payments card (Form RCT 47*) and
- Maintains a record of payments to all subcontractors regardless of whether he/she holds a relevant payments card for them.
* RCT 47 is a relevant payments card on which the principal contractor records payments made without deduction of RCT. An RCT 47 cannot be issued to the principal contractor unless the subcontractor holds a Certificate of Authorisation (C2 card).
How does RCT work?
Tax is deducted by a principal contractor on payments to a subcontractor unless the principal contractor has received a relevant payments card (Form RCT47) for the subcontractor. Where tax is deducted, the principal contractor gives the subcontractor a Form RCTDC, which the subcontractor uses to claim credit for, or repayment of, the tax withheld. The form RCTDC must include the PPS/Tax Reference Number and, if an individual, the date of birth of the subcontractor.
RCT applies to the following:
RCT does not apply to professionals such as architects, surveyors etc.
Are you aware that the VAT Reverse Charge affects contractors involved in the provision of construction services that are subject to RCT? Further information on the VAT Reverse Charge.
Further information on the operation of RCT is available in the Tax & Duty Manuals - Section 16 FOI Act Part 18, Sections 18.2.1 to 18.2.10
