157 Deduction of tax from payments due to defaulters

(1)

Where a taxpayer has made default in the payment to the Commissioner of any income tax (or a part of any income tax) or any interest under Part 7 payable by the taxpayer or any civil penalty (or a part of any civil penalty) incurred by the taxpayer, the Commissioner may from time to time by notice require any person to—

(a)

deduct or extract, in 1 sum, from any amount that is, or becomes, an amount payable in relation to the taxpayer such sum as is equal to the lesser of—

(i)

the amount that, according to the notice, is required to be deducted or extracted:

(ii)

the amount that, at the time at which the deduction or extraction is required to be made in compliance with the notice, is the amount payable in relation to the taxpayer:

(b)

subject to subsection (3), deduct or extract from time to time, by way of instalment, from any amount that is, or from time to time becomes, an amount payable in relation to the taxpayer such sum as is equal to the lesser of—

(i)

the amount that, at the time at which the deduction or extraction is required to be made in compliance with the notice, is the amount required to be so deducted or extracted:

(ii)

the amount that, at the time at which, according to the notice, the amount of the instalment is required to be deducted or extracted, is the amount payable,—

and require that person to pay to the Commissioner, within such time as is specified in the notice, every sum so deducted or extracted, to the credit of,—

(c)

to the extent that that sum is in respect of or in relation to income tax (or any part of any income tax) or any interest under Part 7 assessed on an income tax liability, the taxpayer who has that income tax liability:

(d)

to the extent that that sum is in respect of or in relation to the whole or any part of an amount of tax withheld or deducted or interest payable to the Commissioner or a civil penalty, an account maintained by the Commissioner in relation to that amount of tax or that interest or that civil penalty.

(1A)

A notice of amount to be deducted or extracted issued under subsection (1) may include a daily amount of interest as well as the amount required to be deducted or extracted.

(1B)

The daily amount of interest notified under subsection (1A) shall be calculated for each day, commencing on the date of the notice and ending on the day on which the sum required by the notice is deducted or extracted.

(2)

This section shall bind the Crown.

(3)

Where any notice under this section relates to any amount payable that consists of wages or salary, the sums required to be deducted from that amount shall be computed so as to not exceed the greater of—

(a)

an amount equal to the lesser of—

(i)

an amount calculated at the rate of 10% per week of the income tax due and payable by the taxpayer at the date of the notice:

(ii)

an amount calculated at the rate of 20% of the wages or salary payable:

(b)

$10 per week.

(4)

Any notice under this section may be at any time revoked by the Commissioner by a subsequent notice to the person to whom the original notice was given (in this section referred to as the debtor), and must be revoked by the Commissioner on application for revocation by the taxpayer (being a taxpayer who is a taxpayer otherwise than as an employer) at any time when the Commissioner is satisfied that all income tax then due and payable by the taxpayer has been paid, and that the Commissioner holds to the credit of the taxpayer an amount not less than the amount of the income tax (if any) to become due and payable by the taxpayer during the then current tax year.

(5)

The Commissioner must provide a copy of a notice given to a person under subsection (1) or (4) to the affected taxpayer, and the copy must be provided at the time the notice is given.

(5B)

Despite subsection (5), for a notice relating to an amount of wages or salary described in subsection (3), the Commissioner may dispense with the requirement to send a copy of the notice to the affected taxpayer if, after making reasonable inquiries, the Commissioner has, or can find, no valid address for the affected taxpayer.

(6)

Whenever by virtue of a notice under this section any deduction or extraction is made from any amount payable to any taxpayer, the taxpayer shall be entitled to receive from the debtor a notice of the fact of the deduction or extraction and of the purpose for which it was made.

(7)

Any person making any deduction, extraction, or payment in accordance with a notice under this section shall be deemed to have been acting under the authority of the taxpayer to whom the notice relates and of all other persons concerned and is by this subsection indemnified in respect of such deduction, extraction, or payment.

(8)

The sum deducted or extracted from any amount in accordance with a notice under this section shall be deemed to be held in trust for the Crown, and, without prejudice to any other remedies against the debtor or any other person, shall be recoverable in the same manner in all respects as if it were income tax payable by the debtor.

(9)

Where, in relation to any notice under this section and during any period, that period being—

(a)

where a notice under subsection (1) requires any person, being a bank, to deduct or extract no more than 1 sum, the period that commences on the day on which the notice to the person is given and expires with the day on which the deduction or extraction is required to be made in compliance with the notice:

(b)

where a notice under subsection (1) requires any person, being a bank, to deduct or extract more than 1 sum, by way of instalment,—

(i)

in relation to the sum first required to be deducted or extracted in compliance with the notice, the period that commences on the day on which the notice to the person is given and expires with the day on which the deduction or extraction is so required to be made:

(ii)

in relation to each succeeding sum required to be deducted or extracted in compliance with the notice, the period that commences on the day immediately following the day on which the previous deduction or extraction (being the deduction or extraction that, in relation to that succeeding sum, was the deduction or extraction last required to be made) was required to be made in compliance with the notice and expires with the day on which that succeeding sum is so required to be deducted or extracted,—

any amount is, or becomes, an amount payable in relation to the taxpayer, that amount, or the aggregate of all such amounts, shall, until the expiry of that period and to the extent of an amount equal to the sum that, in compliance with the notice, is required to be deducted or extracted, be deemed to be an amount held in trust for the Crown, and without prejudice to any other remedies against the debtor or any person, shall, if the deduction or extraction required to be made under the notice is not so made, be recoverable in the same manner in all respects as if it were income tax payable by the debtor.

(10)

In this section—

amount payable, in relation to a person and to any taxpayer, means—

(a)

any amount that, on the day on which a notice to the person is given under subsection (1) in relation to the taxpayer, is payable by the person (whether on the person’s own account, or as an agent, or as a trustee, or otherwise however) to the taxpayer:

(b)

any amount that, on any day following the day referred to in paragraph (a), is, or becomes, before any revocation (under subsection (4)) of the notice so given, payable by the person (whether on the person’s own account, or as an agent, or as a trustee, or otherwise), to the taxpayer;—

and includes—

(c)

where the person is a bank, money (including any interest on that money) that—

(i)

on the day on which a notice to the person is given under subsection (1) in relation to the taxpayer, is on deposit or is deposited with the person to the credit of the taxpayer; or

(ii)

on any day following the day referred to in subparagraph (i) is on deposit or is deposited, before any revocation (under subsection (4)) of the notice so given, with the person to the credit of the taxpayer,—

whether the deposit or the depositing is on current account, or so as to bear interest for a fixed term or without limitation of time, and whether or not the taxpayer has made any application to withdraw or uplift the money:

(cb)

where the person is a tax pooling intermediary, money that is paid to the Commissioner, on the date the Commissioner receives the payment;—

but does not include money deposited in any account that is—

(d)

a Home Lay-by Account within the meaning of the Post Office Act 1959

(e)
[Repealed]

(f)
[Repealed]

(g)
[Repealed]

bank means—

(a)

any building society registered under the Building Societies Act 1965, in respect of any deposits with the building society:

(b)

any person (not being a person of the kind referred to in paragraph (a)) that is a bank within the meaning of the Banking Act 1982

income tax includes—

(a)

income tax payable under the Income Tax Act 2007 and the Income Tax Act 2004 and the Income Tax Act 1994 and the Income Tax Act 1976:

(b)

an amount of tax withheld, or combined tax and earner-related payment, to which section RD 4(1) of the Income Tax Act 2007 applies, or a tax deduction or combined tax and earner premium deduction or combined tax and earner levy deduction to which section NC 15 of the Income Tax Act 2004 or of the Income Tax Act 1994 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 applies or a tax deduction to which section 353 of the Income Tax Act 1976 applied:

(bb)

amounts paid to an intermediary in accordance with sections RP 17 to RP 21 of the Income Tax Act 2007 or subpart MBA of the Income Tax Act 2004:

(c)

an amount to which section RD 4(4) of the Income Tax Act 2007 or section NC 16(b) of the Income Tax Act 2004 or of the Income Tax Act 1994 applies or section 355(b) of the Income Tax Act 1976 applied:

(d)

an amount which, under section 168 of this Act or section 366 of the Income Tax Act 1976, constitutes a debt payable to the Commissioner:

(e)

an amount that under sections RA 10 and RD 70 of the Income Tax Act 2007 or section NE 5 of the Income Tax Act 2004 or of the Income Tax Act 1994 or section 336ZF of the Income Tax Act 1976 constitutes a debt payable to the Commissioner:

(f)

an amount of unpaid tax subject to Part 10A:

(g)

an amount of unpaid contribution that was payable under subpart 1 of Part 3 of the KiwiSaver Act 2006:

(h)

an amount of short payment under Part 3, subpart 3 of the KiwiSaver Act 2006 that relates to a compulsory employer contribution:

(i)

an amount of compulsory employer contributions unpaid, specified in a notice under section 101I(5) of the KiwiSaver Act 2006

taxpayer

(a)

in relation to income tax within the meaning of paragraphs (b) and (d) of the definition of income tax in this subsection, includes an employer and a PAYE intermediary; and

(b)

in relation to income tax within the meaning of paragraph (e) of the definition of income tax in this subsection, includes an employer.

(11)

For the purposes of the definition of amount payable in subsection (10), money that is on deposit or is deposited to the credit of a taxpayer includes money that—

(a)

is held in a joint bank account in the name of the taxpayer and 1 or more other persons; and

(b)

can be withdrawn from the account by or on behalf of the taxpayer without a signature or other authorisation being required at the time of the withdrawal from, or on behalf of, the other person or persons.

(12)

Subsection (11) does not apply when the joint bank account is an account of a partnership that files a return of income under section 33(1).

Compare: 1976 No 65 s 400; 1994 No 76 s 72

Section 157(1): replaced (with effect on 1 April 1997), on 23 September 1997, by section 99(1) of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).

Section 157(1): amended, on 1 April 2005 (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 157(1)(d): amended, on 1 April 2008 (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 157(1A): inserted (with effect on 1 April 1997), on 23 September 1997, by section 99(1) of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).

Section 157(1B): inserted (with effect on 1 April 1997), on 23 September 1997, by section 99(1) of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).

Section 157(4): amended, on 2 June 2016, by section 172(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 157(4): amended, on 1 April 2005 (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 157(5): replaced, on 2 June 2016, by section 172(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 157(5B): inserted, on 2 June 2016, by section 172(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 157(6): amended, on 1 April 2005 (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 157(10) amount payable paragraph (c): amended, on 29 August 2011, by section 186 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 157(10) amount payable paragraph (cb): inserted, on 29 August 2011, by section 186 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 157(10) amount payable paragraph (e): repealed, on 2 June 2016, by section 172(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 157(10) amount payable paragraph (f): repealed, on 3 June 2017, by section 4(2) of the Statutes Repeal Act 2017 (2017 No 23).

Section 157(10) amount payable paragraph (g): repealed, on 3 June 2017, by section 4(2) of the Statutes Repeal Act 2017 (2017 No 23).

Section 157(10) income tax paragraph (a): replaced (with effect on 1 April 1995), on 23 September 1997, by section 99(2) of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).

Section 157(10) income tax paragraph (a): amended, on 1 April 2008 (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 157(10) income tax paragraph (a): amended, on 1 April 2005 (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 157(10) income tax paragraph (b): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2001 (2001 No 130).

Section 157(10) income tax paragraph (b): amended, on 1 April 2008 (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 157(10) income tax paragraph (b): amended, on 1 April 2005 (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 157(10) income tax paragraph (b): amended, on 1 April 2002, by section 338 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (2001 No 49).

Section 157(10) income tax paragraph (b): amended, on 19 December 1998, by section 416 of the Accident Insurance Act 1998 (1998 No 114).

Section 157(10) income tax paragraph (bb): inserted, on 1 April 2003, by section 140(1) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).

Section 157(10) income tax paragraph (bb): amended, on 1 April 2008 (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 157(10) income tax paragraph (bb): amended, on 1 April 2005 (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 157(10) income tax paragraph (c): amended, on 1 April 2019, by section 361 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).

Section 157(10) income tax paragraph (c): amended, on 1 April 2008 (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 157(10) income tax paragraph (c): amended, on 1 April 2005 (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 157(10) income tax paragraph (e): amended, on 1 April 2008 (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 157(10) income tax paragraph (e): amended, on 1 April 2005 (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 157(10) income tax paragraph (f): inserted, on 20 May 1999 (applying on and after 20 May 1999), by section 111(1) of the Taxation (Accrual Rules and Other Remedial Matters) Act 1999 (1999 No 59).

Section 157(10) income tax paragraph (g): inserted, on 1 December 2006, by section 231 of the KiwiSaver Act 2006 (2006 No 40).

Section 157(10) income tax paragraph (h): inserted, on 1 April 2008, by section 22 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).

Section 157(10) income tax paragraph (i): inserted, on 1 April 2008, by section 22 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).

Section 157(10) penalty: repealed, on 26 July 1996, by section 45(2) of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).

Section 157(10) taxpayer: replaced, on 26 March 2003 (applying for pay periods beginning on and after 1 April 2004), by section 140(2) of the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act 2003 (2003 No 5).

Section 157(11): inserted, on 21 December 2010, by section 161 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 157(12): inserted, on 21 December 2010, by section 161 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).