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Tax Administration Act 1994

Recoveries - Deductions

171: Person failing to withhold RWT

You could also call this:

"What happens if you don't take out tax when you should"

Illustration for Tax Administration Act 1994

If you fail to withhold RWT, you will owe the Commissioner the amount you should have withheld. You will have to pay this amount to the Commissioner on the day it was due. The Commissioner can also try to recover this amount from the person who received the income. If someone else has already withheld RWT from the income you failed to withhold, the Commissioner might consider that you have paid the tax. This can affect your liability under this section and section 172. The Commissioner can decide to recover the amount from you, the recipient, or both of you. You should note that the Commissioner has the right to recover the amount from both you and the recipient of the income. The Commissioner can choose to recover the whole amount from one person or partly from one and partly from the other. This is in addition to any other rights the Commissioner has to recover income tax from the recipient.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM357914.

Topics:
Money and consumer rights > Taxes
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"Getting back money held in trust for the government"

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Part 10Recoveries
Deductions

171Person failing to withhold RWT

  1. Where a person fails to withhold RWT in accordance with that person's obligations under the RWT rules, the amount in respect of which default has been made shall constitute a debt payable by that person to the Commissioner, and shall be deemed to have become due and payable to the Commissioner on the day on which it would have been due to be paid to the Commissioner had the tax been correctly withheld.

  2. The right of the Commissioner to recover from the person the amount in respect of which default has been made shall be in addition to any right of the Commissioner to recover from the recipient of that amount any income tax in respect of an income tax liability that would have arisen if the only income of the recipient were resident passive income of which that amount formed part; and nothing in the RWT rules shall be construed as preventing the Commissioner from taking such steps as the Commissioner thinks fit to recover that amount from both of those persons concurrently, or from recovering that amount wholly from one of those persons, or partly from one and partly from the other of those persons.

  3. Notwithstanding subsections (1) and (2), where and to the extent to which any person (in this subsection referred to as the first person) otherwise liable to make payment of any amount in accordance with this section can satisfy the Commissioner that any other person has withheld RWT from the resident passive income which the first person failed to withhold, for the purposes of this section and section 172 only in determining any liability of the first person under this section or section 172, that tax made by the other person shall be deemed to be made by the first person.

Compare
  • 1976 No 65 s 327S
Notes
  • Section 171 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 171(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 171(2): replaced, on (applying to 1997–98 and subsequent income years), by section 477 of the Taxation (Core Provisions) Act 1996 (1996 No 67).
  • Section 171(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 171(2): amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).
  • Section 171(3): 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).