IRD “CASHIES” CRACKDOWN UPDATE
In their latest Agents Answers newsletter to tax agents and accountants, the IRD have advised that they are continuing their focus on undeclared cash (‘cashies”) in the construction industry and hospitality sector.
The IRD advise that they are continually improving their processes of identifying non-compliance (IRD speak for non-declaration) and their analysis indicates that some taxpayers are significantly under-reporting income. This includes directly approaching taxpayers and asking if they are declaring all their income. So don’t be surprised if they approach you.
The IRD are enterprising in how they establish if someone is doing “cashies”. Amongst other things they check if the income/expenditure ratios as disclosed via the GST returns fall within the “industry” parameters; a simple but effective way of flagging likely suspects. They will check with timber merchants for deliveries made to a contractor and then undertake a GST review to establish if the delivery has been charged by the contractor to a client. I recall using this method to uncover a fraud being carried out in a firm I was working for at the time – it was so simple!
Not declaring all you income – doing “cashies” is tax evasion!
Be warned – the penalties for doing “cashies”, if you are caught, will far outweigh any gain you may make. Not only will you be charged short-fall penalties of upto 150% of the unpaid tax plus late payment interest, the IRD will prosecute you for tax evasion. It is their policy to prosecute all tax evaders without exception. This is a criminal prosecution and as such will have to be declared whenever you enter another country, should you have the good fortune to be able to do so after the IRD have finished with you.