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Tax Administration Act 1994

Recoveries - Deductions

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

You could also call this:

"What happens if an employer doesn't take tax out of an employee's pay?"

Illustration for Tax Administration Act 1994

If you are an employer and you do not take tax out of your employee's pay, you will owe that money to the Commissioner. You should have taken the tax out under the PAYE rules and other laws like the Accident Compensation Act 2001, which you can read about in section 221 of that Act. The Commissioner can get this money from you. If you do not take tax out of your employee's pay, the Commissioner can get that money from you or your employee. The Commissioner can get the money from both you and your employee, or just one of you. If you pay the employee's tax, you can get that money back from the employee. If someone is helping you with PAYE, like a PAYE intermediary, they have to follow the same rules as you. They have to give the Commissioner the tax they take out of the employee's pay, as stated in section RD 4 of the Income Tax Act 2007. The PAYE intermediary also has to give the Commissioner information about the employee's pay, as required by sections RP 9 to RP 11 and section RP 8 of the Income Tax Act 2007. When the law talks about an employer, it also means a PAYE intermediary. This means the PAYE intermediary has to do the same things as an employer, like taking tax out of the employee's pay and giving it to the Commissioner.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM357479.

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

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

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169: Unpaid tax payments, etc, to constitute charge on employer's or PAYE intermediary's property, or

"Unpaid tax can be taken from an employer's or PAYE intermediary's property"

Part 10Recoveries
Deductions

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

  1. Where an employer fails to withhold or deduct an amount of tax or combined tax and earner-related payment in accordance with the employer's obligations 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, the amount in respect of which default has been made shall constitute a debt payable by the employer to the Commissioner, and shall be deemed to have become due and payable to the Commissioner on the date on which under section RD 4 of the Income Tax Act 2007 the employer would have been required to pay to the Commissioner the tax or combined tax and earner-related payment.

  2. The right of the Commissioner to recover from the employer the amount in respect of which default has been made shall be in addition to any right of the Commissioner to recover that amount from the employee under the PAYE rules; and nothing in those rules shall be construed as preventing the Commissioner from taking such steps as the Commissioner thinks fit to recover that amount from the employer and from the employee concurrently, or from recovering that amount wholly from the employer or from the employee or partly from the employer and partly from the employee.

  3. Where any amount, including a penalty, recoverable in accordance with the PAYE rules from the employee is in fact paid by the employer, the amount so paid may be recovered by the employer from the employee.

  4. This section applies to a person instead of an employer if the person is acting as a PAYE intermediary for the employer in relation to an employee and a pay period, and the employer, for the pay period, has—

  5. 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 of that Act.

      1. For the purpose of applying this section to a person acting as a PAYE intermediary, references to an employer are to be read as references to a person acting as a PAYE intermediary.

      Compare
      • 1976 No 65 s 366
      Notes
      • Section 168 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 168 heading: amended, on (applying for pay periods beginning on and after 1 April 2004), by section 143(1) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).
      • Section 168(1): amended, on , by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
      • Section 168(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 168(1): amended, on , by section 338 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (2001 No 49).
      • Section 168(1): amended, on , by section 416 of the Accident Insurance Act 1998 (1998 No 114).
      • Section 168(4): inserted, on (applying for pay periods beginning on and after 1 April 2004), by section 143(2) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).
      • Section 168(4)(a): 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 168(4)(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 168(5): inserted, on (applying for pay periods beginning on and after 1 April 2004), by section 143(2) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).