02/04/2026
IRD Clamping Down on PAYE Default
Inland Revenue has issued Revenue Alert RA 26/01 (16 March 2026) highlighting that failure to remit PAYE deductions is a serious offence. Employers are required to pass on PAYE and related deductions (e.g. KiwiSaver, student loan repayments) by the due date. Failure to do so particularly where funds are knowingly used for other purposes may result in criminal prosecution.
The Alert reinforces that this is not merely a tax debt issue, but one of conduct. Persistent non-payment or using PAYE funds to finance business operations may lead Inland Revenue to treat the matter as enforcement rather than compliance, including prosecution of directors and those involved.
Penalties for breaches include fines of up to $50,000 and/or imprisonment for up to five years. Inland Revenue has made it clear that repeated or deliberate non-remittance will be actively pursued.
The key message is that early engagement is critical. Businesses must stop further non-compliance, ensure current obligations are met, and proactively engage with Inland Revenue with realistic repayment proposals. Delays or avoidance significantly increase the risk of escalation to enforcement action, including liquidation or prosecution.
