The IRD reported discovering tax discrepancies of over $1.2 billion for the 2008-09 financial year, according to the IRD’s 2009 annual report. This figure is down on the $1.449b in 2007-08, but up significantly on the 2008-09 budget of $877 million. Of the total, $436m was as a result of IRD investigations, $123m aggressive tax issues, $127 tax evasion and fraud and $583 from large enterprises (defined as large businesses with group turnover of more than $100m, even though the figure has since been changed to $300m)
This level of discrepancy is astounding. I questioned the Commissioner of the IRD about this figure when he appeared in front of the FEC yesterday, and asked if the law was confusing or if companies just got it wrong, all he said was words to the effect that the law is very complex and sometimes the companies don’t get it right. Wow.
As for large enterprises: don’t these companies either have in-house tax experts or employ high-end lawyers and accountants to manage their tax liabilities.? I could be wrong, and maybe the law is just too complex in this area, however, it looks like to me that some large companies may be manoeuvring to avoid their tax responsibilities.
Where the IRD finds a discrepancy between the tax self assessed by the tax payer and the liability determined by an investigation, a new assessment is issued by the IRD. The IRD notes that discrepancies fluctuate from year to year depending on the effect of large cases and the nature of the non-compliance the IRD has investigated. Perhaps either the law needs to be amended if it is causing such a level of confusion, or companies should be held to account if they are seen to be deliberately avoiding tax.
Ah tax crime, pity it happens.
hah, i was at a course this morning, where someone from the IRD covered this stuff. i suspect the majority of the “large enterprises” stuff would be the banks and recent cases they have lost?
re the investigations, i wonder how much of this recovered money relates to land transactions, an area of tax law which is full of traps? it has the potential to get worse with the new associated persons rules which will capture a whole heap of transactions, some of them quite unfairly.
but the worst area of tax law is around foreign investment funds, and is driving most accountants crazy right now. i don’t think much of the $1.2bn would relate to this, as it’s still pretty new, and it only affects those investing more than $50,000, but it’s an area that is a lot more complex than it needs to be. anything simplifications here would be really welcome!!
I work. My partner works. We pay taxes (and thanks to IRD for making it easy to pay via internet banking!).
Tell me, why on earth should I bother paying half of what I do pay if ‘big business’ feels that it is ok to pay 1/5th of what they should be paying?
The difference between tax avoidance and tax evasion? The amount of money you can spend on accountants and lawyers.
But if the law can catch up with Westpac, it can catch up with others. http://www.stuff.co.nz/business/industries/2946334/Westpac-expected-to-appeal-961m-tax-ruling
Let’s get these big outfits into the courtroom
“the law needs to be amended if it is causing such a level of confusion”
Yeah, there are some ridiculous laws around, like the 2000 page one the Dems justed passed in the US.