Tax evaders face penalties and prison term

Are you in business? If you are an entrepreneur or a self-employed person, you are probably paying the right amount of tax.

But not everyone complies with the tax laws; there is always a small minority of people who deliberately evade their responsibilities.

You can be assured that the Inland Revenue Department (IRD) takes a firm approach in these cases.

If we have good evidence that someone is evading tax, we will conduct an investigation. We will take action to prosecute them if we find that significant evasion has occurred.

IRD takes these measures to protect the Government’s supply of tax revenue.

Taxes help pay for services that all of us use, including schools, hospitals, police services and roads. If some people do not pay their tax, everyone in the community misses out.

When a tax evader is sentenced in court, we often issue a media release to publicise the case.

Have you seen any of our media releases in the paper? (Indian Newslink regularly publishes them.) You can also find them on our website (www.ird.govt.nz) under ‘Media’ on top of the homepage.

For instance, our media release titled, Former Queenstown man jailed on tax evasion charges would give you a good idea of the consequences of tax evasion.

The defendant was jailed for 12 months at the Dunedin District Court on September 26, 2009 on charges of failing to file his income tax and GST returns (See Homelink in this issue).

There are some important messages in the press release. It makes the point that tax evasion is not a victimless crime like some people may think.

People who dodge paying taxes would have lower overheads. That way, they can undercut honest businesses. That is bad news for everyone, including consumers.

Non-compliant businesses often cut corners with their customers too.

Even people who have been getting away with tax evasion for years will be caught eventually. It is not a case of if but when.

Even if no records were kept, IRD would often be able to estimate the amount of the tax evaded to a standard that is acceptable to a court.

I recommend that you take a moment and read some of our media releases.

If you would like more information about our compliance plans in general, refer to ‘Helping you to get it right: Inland Revenue’s compliance focus 2009-10,’ on our website under ‘About us; Our publications; Reports.’

Abdul Rafik is Inland Revenue’s Community Relationships Advisor based in Auckland. He is happy to answer readers’ queries, which should be sent to:

venkat@indiannewslink.co.nz

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