Voucher ploy to avoid tax on the rise

CLAIRE ROGERS
Last updated 08:05 26/02/2013

Related Links

IRD warns on salary tax avoidance

Relevant offers

Money

Strong dollar drives sales Rising house prices blamed on lack of land - report Beat the power bills with solar, say couple The story behind your coffee price Christchurch $3000 job incentive nets 50 Financial literacy depends on wealth: OECD report Tech-savvy Kiwis devise banking innovations First-home buyers use parents as guarantors Seven frugal habits of the self-made rich Peer-to-peer lending licence issued

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

Comments

Special offers

Featured Promotions

Sponsored Content