The Perplexing PAYE Problem

The Perplexing PAYE Problem 0 Comments Uncategorized By admin

In the field of tax debt, no tax type is so overwhelming, difficult to write off, personally affecting, and criminally prosecutable as not passing on your employees’ PAYE to the Inland Revenue.
That’s not to say that if you fall behind in your PAYE you cannot work out a repayment schedule – however, the powers awarded to the Commissioner regarding failure to file or pay PAYE are weighty.
So, how can you avoid falling into the PAYE trap – apart from having wonderful cash flow and a great payroll system?
One option is contractors, rather than employees. Contractors can fill temporary or limited contracts, so you only employ people when the need is there.
Contractors are also responsible for their own tax and other additions such as ACC levies or Kiwisaver.

Other differences include:

  • Employees have employment agreements with your business, while contractors are free to work for anyone
  • Employees will work where and when you tell them to. Contractors can decide how they work and even employ other people to help them
  • Employees generally use their employer’s equipment, while contractors use their own
  • Employees are required to work set weekly or monthly hours and may get paid overtime for working extra. Contractors work to agreed timeframes
  • Employment laws – Most employment laws do not cover contractors in the same way as employees. Unlike employees, contractors:

– don’t get annual leave or sick leave
– can’t bring personal grievances
– pay their own tax
Also, your business does not:
– hold contractor’s records — but it does for employees
– give contractors employment agreements
If you are uncertain about employing staff but need assistance, employing a contractor is a good way to ensure you avoid the pitfalls of PAYE. Not passing PAYE on to IRD affects everyone in the country so, if you have worries – find an alternative that suits. If you have already been affected by PAYE debt, don’t panic – we can help. Just call 0800 829 277 and ask for Rosie, today.

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