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Income Tax Act 2007

General collection rules - Employment-related taxes - Paying amounts of tax

RD 23: Bonds given by employers of certain non-resident employees

You could also call this:

"When employers don't take tax from pay for workers not from New Zealand"

Illustration for Income Tax Act 2007

You pay tax on the money you earn. If you are not from New Zealand, you might not have to pay tax. Your employer might not know if they should take tax from your pay. They can ask to not take tax from your pay if they give a bond or security to the government. If the government accepts the bond, your employer does not take tax from your pay. They also do not give information about you to the government. A special tax code under section 24E of the Tax Administration Act 1994 is not used for your pay. If something changes and you have to pay tax, your employer must take tax from your pay. The government might tell your employer that you have to pay tax. Then your employer must give the government the tax they did not take from your pay. The government treats the tax paid as if it was paid on the day they told your employer. But section 120U of the Tax Administration Act 1994 can override this rule.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519990.

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RD 22: Providing employment income information to Commissioner, or

"Telling the tax department about money you earn from work"

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Part RGeneral collection rules
Employment-related taxes: Paying amounts of tax

RD 23Bonds given by employers of certain non-resident employees

  1. This section applies if it cannot reasonably be determined at the time an employer or PAYE intermediary is required to withhold the amount of tax for a PAYE income payment whether the payment will be exempt income of an employee under either section CW 19 (Amounts derived during short-term visits) or a double tax agreement.

  2. The employer or PAYE intermediary may apply to the Commissioner to be released from their obligation to withhold the amount by providing a bond or other security for the amount that would be required to be withheld but for this section.

  3. If the Commissioner accepts the bond or security referred to in subsection (2),—

  4. the employer or PAYE intermediary must not withhold the amount of tax for a PAYE income payment to the employee; and
    1. information concerning the employee must not be included in employment income information; and
      1. a non-notified tax code under section 24E of the Tax Administration Act 1994 must not be used in relation to the PAYE income payment.

        1. If the employee later becomes liable to pay income tax because of an event provided for in an arrangement made under section BH 1 (Double tax agreements) or CW 19, the application of subsection (3) ends, and the employer or PAYE intermediary must withhold the amount of tax for a PAYE income payment made to the employee.

        2. If the Commissioner considers that the employee is liable for income tax in relation to a PAYE income payment from which no amount of tax is withheld because of the application of subsection (3), the Commissioner must notify the employer or PAYE intermediary, as applicable. The employer or intermediary must then account for and pay the total amount of tax for all PAYE income payments that would have been due, or a lesser amount as the Commissioner determines.

        3. An amount paid to the Commissioner under subsection (5) is treated as the amount of tax for a PAYE income payment made on the date of the Commissioner’s notice. Section 120U of the Tax Administration Act 1994 overrides this subsection.

        Compare
        Notes
        • Section RD 23(3)(b): amended, on , by section 209(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section RD 23(3)(c): amended, on , by section 209(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section RD 23(4): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
        • Section RD 23 list of defined terms apply: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
        • Section RD 23 list of defined terms employer monthly schedule: repealed, on , by section 209(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section RD 23 list of defined terms employment income information: inserted, on , by section 209(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section RD 23 list of defined terms notice: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).