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Tax Administration Act 1994

Penalties - Civil penalties

141E: Evasion or similar act

You could also call this:

"Paying a penalty for not paying tax or helping someone cheat the tax system"

Illustration for Tax Administration Act 1994

You must pay a penalty if you evade tax or do something similar. This can happen if you avoid paying tax or help someone else get a refund they are not entitled to. You might also have to pay a penalty if you do not make a deduction or withholding of tax when you are supposed to. If you enable or try to enable someone else to get a refund they are not entitled to, you may have to pay a penalty. This penalty is the same as the one the other person would have to pay if they had done it themselves. The penalty for evasion or a similar act is 150% of the tax shortfall. You will not have to pay a penalty in some cases, such as if you can show that you accounted for a deduction or withholding, but were late due to illness or an accident. You also will not have to pay a penalty if you are already being charged with a penalty under section 141ED for the same tax position.

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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=DLM356469.

Topics:
Money and consumer rights > Taxes
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141D: Abusive tax position, or

"When you try to avoid paying tax in a way that's not allowed"

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141EA: Shortfall penalty and provisional tax, or

"Paying the right amount of provisional tax on time to avoid a penalty"

Part 9Penalties
Civil penalties

141EEvasion or similar act

  1. A taxpayer is liable to pay a shortfall penalty if, in taking a tax position, the taxpayer—

  2. evades the assessment or payment of tax by the taxpayer or another person under a tax law; or
    1. knowingly applies or permits the application of the amount of a deduction or withholding of tax made or deemed to be made under a tax law for any purpose other than in payment to the Commissioner; or
      1. knowingly does not make a deduction, withholding of tax, or transfer of payroll donation required to be made by a tax law; or
        1. obtains a refund or payment of tax, knowing that the taxpayer is not lawfully entitled to the refund or payment under a tax law; or
          1. attempts to obtain a refund or payment of tax, knowing that the taxpayer is not lawfully entitled to the refund or payment under a tax law; or
            1. enables another person to obtain a refund or payment of tax, knowing that the other person is not lawfully entitled to the refund or payment under a tax law; or
              1. attempts to enable another person to obtain a refund or payment of tax, knowing that the other person is not lawfully entitled to the refund or payment under a tax law—
                  1. (referred to as evasion or a similar act).

                1. No person shall be chargeable with a shortfall penalty under subsection (1)(b) if that person satisfies the Commissioner that the amount of the deduction or withholding has been accounted for, and that the person's failure to account for it within the prescribed time was due to illness, accident, or some other cause beyond the person's control.

                2. No person shall be chargeable with a shortfall penalty under subsection (1)(b) for taking a tax position if the person is chargeable with a shortfall penalty under section 141ED for taking the tax position.

                3. If a taxpayer enables or attempts to enable another person to obtain a refund or payment of tax, knowing that the other person is not lawfully entitled to the refund or payment under a tax law, the taxpayer is liable to pay to the Commissioner an amount equal to the shortfall penalty that would have been imposed if the other person's tax position had been the taxpayer's tax position.

                4. The penalty payable for evasion or a similar act described in subsection (1) is 150% of the resulting tax shortfall.

                Notes
                • Section 141E: inserted, on , by section 43 of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).
                • Section 141E(1)(c): replaced (with effect on 6 January 2010), on , by section 682 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section 141E(1)(da): inserted, on , by section 52(1) of the Taxation (Beneficiary Income of Minors, Services-Related Payments and Remedial Matters) Act 2001 (2001 No 4).
                • Section 141E(1)(e): amended, on , by section 52(2) of the Taxation (Beneficiary Income of Minors, Services-Related Payments and Remedial Matters) Act 2001 (2001 No 4).
                • Section 141E(1)(f): inserted, on , by section 52(2) of the Taxation (Beneficiary Income of Minors, Services-Related Payments and Remedial Matters) Act 2001 (2001 No 4).
                • Section 141E(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 141E(2B): inserted, on (applying for tax positions taken on or after 1 April 2008), by section 254(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section 141E(3): amended, on , by section 52(3) of the Taxation (Beneficiary Income of Minors, Services-Related Payments and Remedial Matters) Act 2001 (2001 No 4).