IRD smells a rat in unaccounted cash deals

Venkat Raman – 

An increasing number of traders are declaring all their income, especially cash obtained for various jobs.

The sudden display of honesty is stated to be the outcome of the crackdown by Inland Revenue Department (IRD) in recent weeks.

Budget Funding

IRD has received increased funding of $29 million (to be spent over the next four years) in Budget 2015 to ensure higher level of tax compliance.

The Department now has a total of $62 million to ensure greater efficiency in tax collection. Observers said that officials will target industries and sectors that have a tendency to deal in cash payments, receive cash without assigning proper invoices and filing returns.

Anxious callers

Lester Binns, Chief Executive of MyTax.co.nz said that he had received more than 1000 calls on the first day after IRD intensified campaign.

“They wanted to know if they should add the cash they receive to the tax refund information which they had already submitted. The volume of calls has significantly increased following the release of IRD advertisements in various media,” he said.

According to Mr Binns, the nature of queries varied but showed that people had understood that the Department was getting tough.

“One trader asked several questions on how to file returns, saying that he received more than $68,000 as cash for painting jobs. Callers also wanted to satisfy themselves that they were complying with procedures and were paying the right amount of tax. It is good to remind people that they should not transact business on cash payment and that if they did, such cash must be properly accounted. A majority of Kiwis work hard and pay their fair share of tax,” he said.

Outstanding results

IRD Marketing and Communications Group Manager Andrew Stott said that the results of the campaign have been outstanding.

“Our Campaign, which advises people to ‘Declare it all or risk everything’ in the newspapers, radio stations and mobile advertisements are a prompt for everyone, and not just for ‘the little guys.’ It is early days but we are already seeing a shift in attitude. The popular belief that we only target ‘small fry’ evaders is not true,” he said.

He said that his Department has identified tradespeople as a high risk sector’ and that tax officials take all levels of tax evasion seriously.

Mr Stott said that income tax officials have found people receiving $30,000 in cash for a job ‘putting it straight into their pocket.’

Good returns

“Our concern is when individuals or businesses do not pay their fair share of tax, they are cheating those who are doing the right thing and expecting others to pay their way. Last year, the ‘Hidden Economy Programme’ accrued $6 for every dollar invested,” he said.

IRD also uses tools and intelligence to identify individuals and companies not paying their fair share of tax. By providing information, reminders, seminars, compliance check and online self-assessment tools, the Department helps taxpayers declare and pay the right amounts.

It also closely scrutinises large corporates to ensure they’re getting their taxes right.

According to Mr Stott, the ‘Declare It All or Risk Everything’ Campaign will run in the Auckland suburbs of Flatbush, Takanini, Silverdale and Albany until the end of June.

“It may be rolled out wider,” he said.

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