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RA 10: When obligations not met
or “Consequences for failing to meet tax payment obligations”
You could also call this:

“Correcting tax underpayment errors when paying others”

This section explains what you can do if you’re supposed to take out tax from money you give someone, but you make a mistake and don’t take out enough.

If you make this kind of mistake, you can fix it by taking a bit more money out next time you pay the person, or by asking the person to give you the missing amount. If the payment was something other than money, you can change how much of it is taxed.

You need to fix the mistake quickly. If you find the mistake in the same tax year, try to fix it by the next time you have to report about the payments. If you find the mistake in a later year, you can still fix it, but there are limits on how much you can adjust.

If you’re asking the person to pay you back the missing amount, you have to do this in the same tax year as the mistake.

When you fix the mistake, it’s treated as if you did it on the original due date for the tax.

If you make adjustments for mistakes found in a later year, you need to tell the tax department. You have to give them specific information about the adjustment and any changes to the details you reported before.

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Next up: RA 12: Adjustment to correct errors: certain excess amounts

or “How to fix mistakes when too much tax is taken from your payment”
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Part R General collection rules
General withholding and payment obligations

RA 11Adjustment to correct errors: certain underpayments

  1. This section applies when—

  2. a person (the payer) is required to withhold an amount of tax for resident passive income or non-resident passive income in relation to a payment to another person (the payee); and
    1. the payer, through an error, does not withhold some or all of the amount.

      1. To correct the error, the payer may make an adjustment by—

      2. subtracting from a later payment to the payee an amount to correct the deficiency; or
        1. recovering from the payee an amount to correct the deficiency; or
          1. for a non-cash dividend, adjusting the amount that is subject to tax.

            1. Subject to subsection (4),—

            2. for an adjustment for an error discovered in the tax year in which it is made (year 1), the payer must, if it is reasonably practical to do so, make the adjustment under subsection (2) by the next regular reporting date for the delivery of investment income information relating to the payee:
              1. for an adjustment for an error discovered in a tax year following that in which the error is made (year 2), the payer may make an adjustment under subsection (2) by the next regular reporting date in year 2 but only to the extent to which the total adjustments made by the payer in year 2 relating to year 1 are no more than the greater of—
                1. $2,000; or
                  1. 5% of the payer’s withholding liability for RWT or NRWT, as applicable, for the tax year in which the first payment is made to the payee.

                  2. For the purposes of subsection (2)(b), the recovery action must be taken in the same tax year in which the error is made.

                  3. An adjustment under this section is treated as made on the due date for the amount of tax referred to in subsection (1)(a).

                  4. The payer must notify the Commissioner of an adjustment made under subsection (3)(b) at the time it is made, including in their notification—

                  5. the information in schedule 6, table 1, rows 1 to 7, 10, 16, and 22 of the Tax Administration Act 1994, as applicable; and
                    1. adjustments to the items referred to in schedule 6, table 1, rows 8, 9, 11, 14, 15, and 21 of that Act, as applicable.

                      Notes
                      • Section RA 11: replaced, on , by section 178 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).