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Tax Administration Act 1994

Recoveries - Deductions

167: Recovery of tax and payments from employers or PAYE intermediaries

You could also call this:

"Paying tax money to the government, not using it to pay debts"

Illustration for Tax Administration Act 1994

When you take money out of someone's pay, you must hold it for the government. You cannot use this money to pay your debts if you go bankrupt. If you do not pay the money to the government, it will be taken from your assets.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM357456.

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168: Employer or PAYE intermediary failing to withhold or deduct tax or payments, or

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Part 10Recoveries
Deductions

167Recovery of tax and payments from employers or PAYE intermediaries

  1. Every amount of tax or combined tax and earner-related payment withheld or deducted under the PAYE rules and, where applicable, section 115 of the Accident Rehabilitation and Compensation Insurance Act 1992 or section 285 of the Accident Insurance Act 1998 or section 221 of the Accident Compensation Act 2001, shall be held in trust for the Crown, and any amount so held in trust shall not be property of the employer liable to execution, and, in the event of the bankruptcy or liquidation of the employer or of an assignment for the benefit of the employer's creditors, shall remain apart, and form no part of the estate in bankruptcy, liquidation, or assignment.

  2. When an amount of tax or combined tax and earner-related payment has been withheld or deducted under the PAYE rules and, where applicable, section 115 of the Accident Rehabilitation and Compensation Insurance Act 1992 or section 285 of the Accident Insurance Act 1998 or section 221 of the Accident Compensation Act 2001, and the employer has failed to deal with the amount of the tax or payment withheld or deducted (or any part of it) in the manner required by subsection (1) or the PAYE rules, the amount of the tax or payment for the time being unpaid to the Commissioner shall, in the application of the assets of the employer, rank as follows:

  3. where the employer is, or 1 of whom is, an individual, upon the employer’s bankruptcy or upon the employer making an assignment for the benefit of the employer’s creditors, the amount of the tax or payment shall have the ranking provided for in section 274 of the Insolvency Act 2006:
    1. where the employer is a company, upon the liquidation of the company, the amount of the tax or payment shall have the ranking provided for in Schedule 7 of the Companies Act 1993 (whether or not the company has been incorporated or registered under that Act); and
      1. where the employer is a company, upon the appointment of a receiver on behalf of the holder of any debenture given by the company secured by a charge over any property of the company, or upon possession being taken on behalf of the debenture holder of the property, the amount of the tax or payment shall have the ranking provided for in Schedule 7 of the Companies Act 1993 (whether or not the company has been incorporated or registered under that Act), as if the receiver were a liquidator.

        1. This section applies to a person instead of an employer if—

        2. the person is acting as a PAYE intermediary for the employer in relation to an employee and a pay period; and
          1. the employer, for the pay period, has—
            1. paid to the person the salary or wages relating to the employee as required by sections RP 9 to RP 11 of the Income Tax Act 2007:
              1. provided the information required by the person as required by section RP 8(b) of that Act.

              2. For the purpose of applying this section to a person acting as a PAYE intermediary, a reference to an employer is to be read as a reference to a person acting as a PAYE intermediary.

              3. This section shall apply notwithstanding anything in any other Act.

              4. In this section—

                tax deduction, or combined tax and earner-related payment, does not include any late payment penalty or any shortfall penalty.

                Compare
                • 1976 No 65 s 365
                • 1994 No 76 s 56
                Notes
                • Section 167 heading: 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 167 heading: amended, on (applying for pay periods beginning on and after 1 April 2004), by section 142(1) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).
                • Section 167(1): amended, on , by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                • Section 167(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 167(1): amended, on , by section 338 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (2001 No 49).
                • Section 167(1): amended, on , by section 9(1) of the Accident Insurance Amendment Act 2000 (2000 No 6).
                • Section 167(2): amended, on , by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                • Section 167(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 167(2): amended, on , by section 338 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (2001 No 49).
                • Section 167(2): amended, on , by section 416 of the Accident Insurance Act 1998 (1998 No 114).
                • Section 167(2)(a): replaced, on , by section 205 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                • Section 167(2)(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 167(2)(c): 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 167(2B): inserted (with effect on 26 March 2003), on (applying for pay periods beginning on and after 1 April 2004), by section 136(1) of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).
                • Section 167(2B)(b)(i): 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 167(2B)(b)(ii): 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 167(2C): inserted (with effect on 26 March 2003), on (applying for pay periods beginning on and after 1 April 2004), by section 136(1) of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).
                • Section 167(3): amended, on , by section 14 of the Companies Amendment Act 2013 (2013 No 111).
                • Section 167(4) floating charge: repealed, on , by section 191(1) of the Personal Property Securities Act 1999 (1999 No 126).
                • Section 167(4) tax deduction or combined tax and earner-related payment: 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 167(4) tax deduction or combined tax and earner-related payment: amended, on , by section 49 of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).