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Bee



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Topic # 85483 20-Jun-2011 13:13
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This suggestion may be somewhat illegal but its only hypothetical so just humour me for a while :)

Suppose I got sick of paying back my student loan and decided to fill in the form and give it to my employer  to change my tax code.

a) Do you think I would actually get away with it at all?  and if so how long before the IRD catches up with me?
b)  Once they actually catch me would there actually be any fine or penalty imposed say for intentional fraud or "Tax evasion"  or would they just demand the overdue amount repaid immediately?





 

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  Reply # 483155 20-Jun-2011 13:17
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Rather silly of you to have posted that on here, now they're out to get you. Wink

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  Reply # 483161 20-Jun-2011 13:26
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They will catch up with you on that, the question is when. Might not be until the end of the tax year, depends how their systems work.

Might not be a criminial action, but would likely breach your loan contract, and im sure there would be some sort of penalty for that.

IANAL

 
 
 
 


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  Reply # 483166 20-Jun-2011 13:34
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Its not tax evasion.

I'm fairly sure they cannot jail you for not repaying a loan. That would be the case is Dubai, but not here.

But, considering I have paid for your loan, I'd say pay it back and not even 'hypothesize'.

Probably the worst the IRD could do is to bankrupt you.




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  Reply # 483171 20-Jun-2011 13:42
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Your employer will probably get a letter from the IRD stating that you are using an incorrect tax code. It wouldn't be hard for the IRD to spot this and it's probably automated - you earn over the threshold and have a student loan.

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  Reply # 483172 20-Jun-2011 13:43
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They will definitely figure it out sometime, and their reaction to it will depend on a number of factors I imagine.

If you started at a new job and "accidentally" gave your employer the wrong code then you'd probably get away with paying the difference and moving to the correct code next year.

If you tell your current employer that you've finished paying your student loan and want to move to a different code then I would think the IRD would look less kindly at that kind of behaviour.

The IRD website states that if you're using the wrong code, they will write to your employer and get them to change the code.

Bee



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  Reply # 483182 20-Jun-2011 13:57
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Common sense says thats how it should work but does it work that way in reality? This is a govt department after all.  The same department that chased me aggressively for 6 months for a repayment of less than $100. They sent 2 or 3 reminders, and then at the end of the 6 months they just wrote it off (presumably because it was under $100?)  

Just to be clear - At no time was this amount overdue - it was always due to be paid in 6 months time - so I intended to pay it on the last due date.  I just happened to forget about it until 2 days after that date and discovered then that it had been "cancelled"


This is the taxpayers money in Action!!


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  Reply # 483187 20-Jun-2011 13:59
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They will find out at the end of the tax year and then send you an appropriate bill for your income. If you don't pay up they have the right to take you to court but it's up to them.

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  Reply # 483189 20-Jun-2011 14:01
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Kraven: Your employer will probably get a letter from the IRD stating that you are using an incorrect tax code. It wouldn't be hard for the IRD to spot this and it's probably automated - you earn over the threshold and have a student loan.


This is the correct answer, but it's a totally f^2ked up situation anyway.

After I FINISHED paying off my student lona and changed my tax code back to 'M', the IRD changed it BACK to 'M SL' _TWICE_ in the next 3 months, despite my loan being paid off.

Unbelievable incompetence demonstrated personally to me... I think they're likely to detect tax code changes and require the employer to change it back - they are entitled to, and the employer must immediately comply with any IRD request. It's up to you to fix it up after they stuff it up.

Cheers - N

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  Reply # 483192 20-Jun-2011 14:10
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Not quite true, they don't HAVE to change the tax code immediately.

http://www.ird.govt.nz/payroll-employers/make-deductions/emp-deductions-taxcodes-correcting.html

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  Reply # 483197 20-Jun-2011 14:16
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bazzer: Not quite true, they don't HAVE to change the tax code immediately.

http://www.ird.govt.nz/payroll-employers/make-deductions/emp-deductions-taxcodes-correcting.html


They generally have to follow the IRD direction, and in my case even when I was able to show my payroll people that the IRD were wrong, they still have to change the tax code and get me to contest it with the IRD. Twice.


Cheers - N

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  Reply # 483198 20-Jun-2011 14:16
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Your employer will get a tax code change letter and you will get a bill for the outstanding student loan payment amount at the end of the tax year. 

If you don't pay that, it will have penalties etc applied, just like any tax bill.  

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  Reply # 483201 20-Jun-2011 14:22
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wreck90: Its not tax evasion.
I'm fairly sure they cannot jail you for not repaying a loan.


Under student loan legislation they can only fine you for not paying money back, *but*,  but they can Jail you for including incorrect information on the form which declares your tax code. ( Its an IRD form)


Tax Administration Act 1994

143B Evasion or similar offence

Evasion or similar offence

(1) A person commits an offence against this Act if the person—

(c) knowingly provides altered, false, incomplete, or misleading information (including tax returns and tax forms) to the Commissioner or any other person in respect of a tax law or a matter or thing relating to a tax law; or

 (4) A person who is convicted of an offence against subsection (1) or subsection (2) is liable to—

(a) imprisonment for a term not exceeding 5 years; or

(b) a fine not exceeding $50,000; or

(c) both.



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  Reply # 483209 20-Jun-2011 14:51
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Yeah, the IRD stuffs things up frequently.

I was overseas for a number of years and had deregistered from the tax system.

When I got back and re-registered, the IRD got really confused and classified me as a NZ resident and that I had not filed tax returns for a number of years.

They filed a bunch of penalties and things against me including cancellation of filing extensions (even though I had proof/letters that the IRD knew i was not required to file them).

After months of wrangling, I managed to get the financial penalties reversed but I could not get them to reinstate my filing extension - they just refused saying I had not met deadlines . No amount of talking and explaining how I was not even required to file would get them to change their minds.

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  Reply # 483218 20-Jun-2011 15:08
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Bee: a) Do you think I would actually get away with it at all?  and if so how long before the IRD catches up with me?


I doubt it would even go through, I think their systems would pickup the change even with a student loan.

We just had an employee start with us, and within two weeks we had a letter asking us to change them to MSL (from M).

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  Reply # 483227 20-Jun-2011 15:34
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Big brother is definitely watching!

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