Are you in business or self-employed?
In these tight economic times, most businesses are trying to cut costs wherever possible.
But do not be tempted to evade tax!
Our investigators are specially trained to recognise the signs of evasion.
If our law courts find someone guilty of deliberately dodging their tax obligations, the penalties can be severe.
How can you prepare for a tax investigation?
Please record all your income and include in your GST and income tax returns.
Most business income is taxable, including money received from ‘cash jobs,’ work done outside of business hours, and ‘perk jobs’ for friends and family members.
Do not pay expenses ‘out of the till.’
This approach may cause you to understate your income.
Be careful to claim only expenses that relate to your business.
Private or household expenses are generally not deductible.
If you use an asset (like a car for example) partly for business and partly for private use, remember to make an adjustment in your returns to remove the private portion of the expense claim.
If you have staff, please record their details in your wage records and make PAYE and any other required deductions (like child support or student loan repayments) from the salaries and wages paid.
Remember to pay the deductions to the Inland Revenue Department (IRD) by the due date.
You can use our ‘Tax due date calculator’ and print out a customised list of due dates for returns and payments. Please visit www.ird.govt.nz and click on ‘Work it out/Important dates.’
You should keep full records to support the figures in your financial statements.
The records required by us include tax invoices, receipts, cashbooks, bank statements, wage books and working papers.
There are good business reasons to maintain complete and accurate records.
Please see our factsheet ‘Record Keeping’ (IR 1008) under ‘Forms & Guides’ on our website.
The courts are taking a firm line with people found guilty of tax evasion.
On June 28, 2012, a Bay of Plenty woman was jailed for two years and three months after being found guilty of tax evasion involving $167,000.
On June 18, 2012, an Auckland based beneficiary was sentenced to one year and ten months in prison for tax evasion involving just over $170,000.
On June 6, 2012, a former agricultural contractor was sentenced to six months home detention on 19 charges of tax evasion totalling over $173,000.
Indian Newslink regularly reports such cases.
If you are in business, you may like to attend one of our free tax seminars or workshops held in various parts of the country.
Visit www.ird.govt.nz and enter the search term ‘Seminars.’
Abdul Rafik is Inland Revenue’s Community Relationships Advisor based in Auckland. He will answer your queries emailed to email@example.com