Voucher ploy to avoid tax on the rise

Last updated 08:05 26/02/2013

Related Links

IRD warns on salary tax avoidance

Relevant offers


British American Tobacco offers to buy Reynolds in US$47 billion deal How to accumulate and save with AA Smartfuel Single people facing struggle to service mortgages Take action to avoid KiwiSaver disappointment at 65 Trade Me Property data shows no rise in rents for third consecutive month Papakura Configure Express members claim refund demands going unanswered The psychology behind why that smashed avocado costs $22 When price doesn't matter: How we're tricked into needlessly spending hundreds of dollars Boom time for property owners on outskirts of Auckland Peter Townsend: International visitors - Can we cope?

A tax avoidance voucher-for- salary scheme is thought to be losing Inland Revenue and taxpayers hundreds of thousands of dollars and is most common in the charitable sector, the department said.

With the practice, employees receive vouchers - usually in the form of a debit card that can be used for groceries and other household expenses - to replace part of their wages or salaries.

The vouchers are not treated as income and PAYE is not deducted. Also, the vouchers can be used by employees to reduce their child support, student loan or KiwiSaver obligations or claim a larger Working for Families Tax Credit entitlement.

Employers can reduce their KiwiSaver contributions while avoiding paying GST on the vouchers.

The IRD said the practice may constitute tax avoidance and offending companies have been warned they could face serious penalties.

Ad Feedback

- BusinessDay.co.nz


Special offers

Featured Promotions

Sponsored Content