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Tax Administration Act 1994

Penalties - Civil penalties

141AA: Shortfall penalty if non-resident contractor relieved from all liability to pay tax on contract payment

You could also call this:

"Paying a penalty for not withholding tax from a non-resident contractor's payment"

Illustration for Tax Administration Act 1994

If you make a schedular payment to a non-resident contractor, you may have to pay a penalty. This happens if the non-resident contractor does not have to pay income tax on the payment. You have to pay $250 for each month you do not withhold tax or do not give the Commissioner employment income information. If you have to pay this penalty, you do not have to pay another penalty under section 141 for the same thing. The most you have to pay for each month is $1,000. This is for not giving the Commissioner employment income information or not withholding tax from the payment.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM356425.

Topics:
Money and consumer rights > Taxes
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Part 9Penalties
Civil penalties

141AAShortfall penalty if non-resident contractor relieved from all liability to pay tax on contract payment

  1. If a person makes a schedular payment that is a contract payment to a person who is a non-resident contractor and the non-resident contractor is not liable to pay income tax on the contract payment, whether because of a double tax agreement or otherwise, the person who makes the contract payment to the non-resident contractor is liable to pay a shortfall penalty of $250 for each month—

  2. for which the person is required to deliver to the Commissioner employment income information; and
    1. in which the person fails to withhold an amount of tax that is required from a contract payment to the non-resident contractor.

      1. A person who is liable to pay a shortfall penalty under subsection (1) is not liable to pay a shortfall penalty based on the tax shortfall that, but for this section, would be calculated under section 141 in relation to the amount of tax required to be withheld.

      2. The liability under subsection (1) of a person is limited to a total of $1,000 for each month for which the person is required to deliver to the Commissioner employment income information.

      Notes
      • Section 141AA: inserted, on (applying for withholding payments made on or after 1 April 2005), by section 126(1) of the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (2004 No 111).
      • Section 141AA(1): amended, on , by section 354(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
      • Section 141AA(1): amended, on (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).
      • Section 141AA(1)(a): amended, on , by section 354(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
      • Section 141AA(1)(b): amended, on (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).
      • Section 141AA(2): amended, on (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).
      • Section 141AA(3): amended, on , by section 354(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
      • Section 141AA(3): amended, on , by section 354(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).