<\/p>\n
\nThe department has issued a “revenue alert” which are are issued when there are significant or tax issues.
\nPhoto: Supplied\n<\/p>\n
Employers are being warned that they could be sent to prison if they take tax from their employees’ pay and do not send it to Inland Revenue.<\/p>\n
The department has issued a “revenue alert” over the failure of some employers to pass on PAYE deductions.<\/p>\n
These alerts are issued when there are significant or emerging tax issues of concern.<\/p>\n
Employers must pay PAYE, as well as any other deductions from employees’ salaries, by the due dates. If they do not, they can face up to five years in prison.<\/p>\n
Anyone who aids, abets, incites, or conspires with another person to commit to do that also commits a criminal offence. This means, for example, that the director of a company who decides that the company will not pay the deductions to Inland Revenue may be prosecuted for the company’s failure to pay.<\/p>\n
Robyn Walker, tax partner at Deloitte, said it was a timely reminder that not paying PAYE was a really bad thing to do and the consequences could be serious.<\/p>\n
“Historically it was always the case that not paying PAYE was an extremely frowned upon action, as this is tax which is being deducted from employee’s pay and held on trust by the employer. This is conceptually different to if a business is having trouble paying its own company tax bill, because it is other people’s money.<\/p>\n
“Rightly or wrongly, during the Covid years there was more leniency applied to PAYE payments, and so some employers may have begun taking a more casual approach to paying PAYE. This can be seen in the statistics of what makes up tax debt – In September 2000 there was $800m of ’employer’ tax debt, the June 2025 statistics put this at $2 billion now.”<\/p>\n
IR said it had taken legal action that had resulted in people being sent to prison.<\/p>\n
In one case, a Christchurch woman was jailed for three years for taking $1.6 million from employee wages and not passing it on to the tax department.<\/p>\n