Issuing an additional deduction rate or a special assessment to collect a significant under-deduction

Sections 49(1)(a)(i), 50(2) and 51(1)(a)(i)

Three amendments have been made to the provisions enabling an additional deduction rate notice to be issued.

The first amendment clarifies that when a significant under-deduction has occurred because of an employer/PAYE intermediary or borrower error or omission, the Commissioner can issue an additional deduction rate notice for the recovery of the under-deducted amount.

The second provides that the Commissioner can also issue a special assessment to a borrower if the significant under-deduction occurred due to a deliberate action or omission by the borrower or employer/PAYE intermediary.

Previously there was a risk that the additional deduction rate and special assessment provisions would not apply in situations when the employer omitted or deliberately intended not to make a deduction, as this is not an employer "error". This was not the policy intent as the special assessment provisions should be available for all situations when significant under-deduction occurs.

The third amendment clarifies that when the Commissioner issues an additional deduction rate notice, that notice replaces all previous notices issued to that employer in relation to a borrower. This amendment would overcome the situation where a notice issued to one employer could replace all previous notices issued to all employers of the borrower, which was not intended.

Application date

The changes apply from 1 April 2012.