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Tax officials eye offshore income

Tax officials are examining cases involving undeclared overseas income by New Zealand residents.

Inland Revenue Group Manager (Assurance) Martin Scott said all residents were required by law to declare all their incomes, including those earned overseas.

“Such overseas income would include offshore deposits and income held in overseas structures controlled by New Zealand taxpayers,” he said.

Mr Scott said tax inspectors were targeting non-disclosure of offshore bank accounts, the use of foreign credit or debit cards, overseas life insurance policies and superannuation funds.

“We are using our network of tax treaties with other international tax authorities to support our audit activities, as well as actively participating in bilateral and multilateral compliance projects,” he said.

Mr Scott said his Department was receiving “further and better information than ever” on international transactions involving New Zealand tax residents.

The progressive negotiation of Tax Information Exchange Agreements (TIEAs) with offshore finance centres will enable the Department to obtain more details of offshore accounts and assets of New Zealanders, he said.

Failure to declare offshore income or to make appropriate disclosures to Inland Revenue can attract serious penalties, including shortfall penalties of up to 150% and prosecution.

“Penalties may be reduced in the case of voluntary disclosure. Any taxpayer who considers that he or she may be at risk, should consult with a professional adviser and consider a voluntary disclosure before it is too late,” Mr Scott said.

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