Raiz Invest shares plunge following tax withholding disclosure

Shares of micro-investing platform Raiz Invest (ASX: RZI) fell approximately 30% following the disclosure of historical tax withholding and reporting failures. The company announced that an independent review identified issues dating back to 2015, where tax was not withheld from certain payments to investors in three specific funds: the Raiz Invest Australia Fund, the Raiz Property Fund, and the Raiz Residential Property Fund.

The failures involve the omission of tax withholding and the failure to lodge related reports with the Australian Taxation Office (ATO) for investors who had not provided a Tax File Number (TFN) or Australian Business Number (ABN). Raiz has notified both the ATO and the Australian Securities and Investments Commission (ASIC) and has initiated a remediation program.

Raiz stated that the issue “may have a material financial impact on the Company,” noting that potential costs include remediation, penalties, and interest charges. The company is currently unable to reliably estimate the total amount of potential liabilities as the investigation continues. The company's market valuation dropped to approximately $37 million following the announcement.