Section RD 23 — Income Tax Act 2007: Bonds given by employers of certain non-resident employees

RD 23 Bonds given by employers of certain non-resident employees When this section applies (1) This section applies if it cannot reasonably be determined at the time an employer or PAYE intermediary is required to withhold the amount of tax for a PAYE income payment whether the payment will be exempt income of an employee under either section CW 19 (Amounts derived during short-term visits) or a double tax agreement. Providing bond (2) The employer or PAYE intermediary may apply to the Commissioner to be released from their obligation to withhold the amount by providing a bond or other security for the amount that would be required to be withheld but for this section. Consequences of acceptance of bond (3) If the Commissioner accepts the bond or security referred to in subsection (2),— (a) the employer or PAYE intermediary must not withhold the amount of tax for a PAYE income payment to the employee; and (b) information concerning the employee must not be included in an employer monthly schedule; and (c) the no notification rate referred to in section 24B(3)(h) of the Tax Administration Act 1994 must not be used in relation to the PAYE income payment. When subsection (3) no longer applies (4) If the employee later becomes liable to pay income tax because of an event provided for in an arrangement made under section BH 1 (Double tax agreements) or CW 19 , the application of subsection (3) ends, and the employer or PAYE intermediary must withhold the amount of tax for a PAYE income payment made to the employee. Employee’s liability (5) If the Commissioner considers that the employee is liable for income tax in relation to a PAYE income payment from which no amount of tax is withheld because of the application of subsection (3), the Commissioner must notify the employer or PAYE intermediary, as applicable. The employer or intermediary must then account for and pay the total amount of tax for all PAYE income payments that would have been due, or a lesser amount as the Commissioner determines. Treatment of amount paid under subsection (5) (6) An amount paid to the Commissioner under subsection (5) is treated as the amount of tax for a PAYE income payment made on the date of the Commissioner’s notice. Section 120U of the Tax Administration Act 1994 overrides this subsection. Defined in this Act: amount , amount of tax , arrangement , Commissioner , double tax agreement , employee , employer , employer monthly schedule , exempt income , income tax , notify , pay , PAYE income payment , PAYE intermediary , Compare: 2004 No 35 s NC 18 Section RD 23(4): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).