The Inland Revenue Department (IRD) is getting tough with tax evaders, those filing false returns and companies and individuals hiding their real income.
An increasing number of companies are likely to face audits by IRD officials any time during the course of a financial year.
The Government has allocated an additional sum of $78 million in Budget 2012 to IRD for conducting audits, apart from the amount of $119.3 million provided in Budget 2010 to be used over four years.
The Department’s Community Relationships Advisor Abdul Rafik said that tax officials were determined to reduce the level of outstanding tax returns and overdue debt, increasing their focus on addressing fraud.
“We will continue our efforts to reduce tax evasion in the ‘hidden economy’ and make further improvements to our online services and self-management options to provide better and faster service,” he said.
According to Mr Rafik, IRD had achieved ‘excellent results’ on compliance issues over the past 12 months. He said that officials had identified more than $135 million in audit discrepancies and made more than 2000 advisory visits to businesses to educate them on tax obligations.
Earlier this year, the Department had published its first set of industry benchmarks to help businesses compare their performance with others in the related industry or activity.
Special arrangements
Mr Rafik said that while tax officials understand the challenges and problems that small and medium enterprises undergo including poor cash flow, extending credit limits to their customers in times of economic downturn, there was no room for fraud or deliberate acts of hiding income.
“In many cases, companies and individuals may qualify for an instalment arrangement that would allow them to repay their taxes over a fixed period. Such arrangements can save them money and they will not be charged any incremental (monthly) penalties if they comply with the terms of the agreement,” he said.
IRD exists to do its duty of tax collection, which helps the Government to provide quality and efficient public services including health, education, roads and other infrastructure and that defaults would undermine such efforts, he added.
Kiwifood Contractor sentenced
In recent months, New Zealand courts have been issuing tough sentences to tax offenders, convicted of the charges brought against them.
The Tauranga District Court sentenced (on September 17) Balbir Singh, a kiwifruit contractor from Opotiki to 12 months home detention and 300 hours of community work on charges of tax evasion involving $188,000.
The 46-year-old man pleaded guilty to 22 tax evasion charges.
IDR Investigations and Advice Group Manager Patrick Goggin said that officials are aware of tax evasion schemes in the horticulture and agriculture industry and hence have a stronger focus on those involved.
“Mr Singh is the latest in a number of prosecutions in recent years where we have caught people cheating on their tax obligations. Those who are tempted should know that we are closely watching and will take strong action,” he said.
Mr Goggin said that IRD staff had educated Mr Singh earlier on his tax responsibilities but he had ‘deliberately chosen to evade, thinking that he would get away with his offences.’
Serious lapses
According to available information, Mr Singh established ‘JLP Enterprises Limited,’ a horticultural labour contracting company in June 2008. The company was required to file tax forms for 19 employees, and remit PAYE returns monthly and GST returns every two months.
The company filed returns and made payments until February 2009, as required, but did not make PAYE and GST payments thereafter.
“IRD also found that the company had between 50 and 60 employees at times and was still supplying labour to orchards after Mr Singh cancelled the company’s PAYE registration in October 2009,” Mr Goggin said.
IRD records showed that PAYE returns of $52,031 were filed but not paid.
A further $77,784 in PAYE and $58,742 in GST was not filed and remains unpaid.
Mr Goggin warned people operating illegal tax schemes in the agricultural and horticulture industry that they will face serious consequences.
“Our message is, ‘think again, you will be caught and dealt with in terms with the laws in force,” he said.
(Picture courtesy: Top News)
