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

Financial Markets Authority joins education-by-animation trend It's a bad idea to make your customers angry: Cas Carter Real estate clients 'don't like flashiness', despite Ricky Cave comments Sudden leap in NZ credit scores, but we're no better with money Rob Stock: E-bikes now better, leaner, faster Budget Buster: Eight tips for getting cheap rental cars Social impact bonds will one day be in your KiwiSaver KiwiSaver creator Michael Cullen says it's time KiwiSaver fees fell Nigel Latta: Having self-control is essential to becoming wealthy What are the world's most boring jobs?

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