Tax Administration Act 1994

Assessments

94B: Liability of wholly-owned group and other bodies to pay shortfall penalties

You could also call this:

"When a group or company owes tax penalty, each member is responsible to pay it."

Illustration for Tax Administration Act 1994

You can be part of a group of companies that the Commissioner treats as one taxpayer. If the Commissioner finds a tax shortfall, they can ask one company in the group to pay a penalty. All the other companies in the group are still liable to pay the penalty until it is paid in full. You can also be part of a partnership or a group of people who derive or incur amounts jointly. If the Commissioner imposes a shortfall penalty on the partnership or group, you are liable to pay it individually and collectively. This can happen if the partnership or group takes a tax position, or if they take a tax position in a certain way. If a shortfall penalty is imposed on a partnership, each partner pays a part of the penalty based on their share of the partnership. If a shortfall penalty is imposed on a group of people, the Commissioner decides how much each person pays.

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This page was last updated on 28 November 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM354461.

Topics:

Money and consumer rights > Taxes

94A: Assessment of shortfall penalties, or

"How the government works out penalties for not paying tax on time"

94BB: Assessment of penalty for large multinational group failing to meet country-by-country reporting requirements, or

"Big companies might get a penalty if they don't report their income correctly."

Part 6Assessments

94BLiability of wholly-owned group and other bodies to pay shortfall penalties

If the Commissioner treats the companies in a wholly-owned group as if they were a single taxpayer for the purpose of determining a tax shortfall,—
the Commissioner may assess one company in the group for the shortfall penalty; but
all the other companies remain liable to pay the shortfall penalty until it is paid in full.

All the partners in a partnership, and all the persons in any other group of persons that derive or incur amounts jointly or that are assessed together, are liable individually and collectively for a shortfall penalty imposed by the Commissioner—
in respect of a tax position taken; or
as a consequence of how or the way in which a tax position is taken—

For the purposes of subsection (2),—
where a shortfall penalty is imposed in respect of a partnership, the part of that penalty imposed on each partner shall be in proportion to the partner's share or interest in the partnership; and
where a shortfall penalty is imposed in respect of a group of persons (other than a partnership), that penalty shall be imposed in such proportions as the Commissioner determines on any 1 or more of the persons in that group.

Notes

Section 94B: inserted, on 26 July 1996, by section 17 of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).
Section 94B(2): amended, on 26 July 1996 (applying to 1997–98 and subsequent income years), by section 454 of the Taxation (Core Provisions) Act 1996 (1996 No 67).