Inland Revenue issues alert to underscore penalties non-compliance with PAYE obligations
The Inland Revenue has issued a new alert to remind employers of the criminal penalties for neglecting their PAYE obligations.
The Revenue Alert, issued on Monday, highlights that neglecting PAYE obligations is a serious offence that can lead to a maximum of five years' imprisonment.
PAYE (pay as you earn) is the system where employers deduct income tax from employees' wages and salaries and pay it to Inland Revenue on their behalf.
"An employer who deducts PAYE and related amounts from salary or wages and, knowingly, applies the deductions for a purpose other than in payment to Inland Revenue commits a criminal offence," the alert said.
"Any person who aids, abets, incites, or conspires with another person to commit this offence also commits a criminal offence."
Making deductions and failing to pay them to Inland Revenue carries a maximum sentence of up to five years in prison, according to the agency.
They may also be liable to a fine not exceeding $50,000, or both a fine and prison time.
"The Commissioner considers that deducting PAYE and related amounts from salary or wages and failing to pay the deductions to Inland Revenue poses a significant risk to the integrity of the tax system," the alert said.
"The Commissioner will consider, where appropriate, the possibility of prosecution where this behaviour is identified."
In one of the cases cited by the IR, an employer in Christchurch was jailed for three years for taking $1.6 million from employees' wages and not passing it to the IR.
A company director also returned from Australia last year to face PAYE charges instead of facing extradition.
