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Employers must make deductions for PAYE, ESCT (employer superannuation contribution tax) formerly SSCWT, student loan repayments, child support and KiwiSaver contributions when required, from any payments made to employees. Failure to do this is a serious offence and can result in penalties and fines being imposed.
Anyone who knowingly fails to make deductions can be fined up to $25,000 for a first offence and $50,000 for subsequent offences. Shortfall penalties may also be charged.
Note: If you can’t make the student loan, child support, KiwiSaver or PAYE deductions, contact us straightaway. You must still file your Employer monthly schedule (IR348) and Employer deductions (IR345) or Employer deductions ESCT (IR346) by the due date.
Paying employee deductions
Employers must pay deductions to us by each due date. The money deducted does not, at any stage, belong to employers. Under no circumstances should the deductions be used for any other purpose than for payment to Inland Revenue. We will help employers who try to meet their responsibilities but will take action against employers who do not comply with the tax laws.
Failing to pay deductions to Inland Revenue is a serious offence and can result in prosecution. An employer who is convicted may be:

• fined up to $50,000 and/or
• sent to prison for up to five years.

The name of anyone convicted will also appear in the New Zealand Gazette.

Souce: http://www.nzppa.co.nz/  newsletter 10th April 2018

Reference: http://www.ird.govt.nz/payroll-employers/employer-obligations/fail-to-deduct/