Latest Tax News and Policy Changes

Below are the Tax News and Policy Updates posts for the last six months...

 


Tax evasion results in prison
16 January 2014

The sentencing of a Taranaki man to nine months in jail is a warning to those who deliberately provide misleading information to Inland Revenue.

Roger Brown was sentenced in the Hawera District Court yesterday for deliberately falsifying details in his GST returns.

Investigations and Advice Group Manager, Karen Whitiskie, said that dishonestly claiming GST on property has consequences and any deliberate attempt to evade tax obligations can be very serious.

"The offender in this case came to our attention as he had not completed all required steps in filling his GST returns over a period of two years".

When contacted Mr Brown confirmed his taxable activity as a courier driver, changed later to long haul freight, and that claimed expenses of $175,000 related to purchasing a truck.

A subsequent GST return claiming the value of his residential home lead to an investigation.

During this investigation Inland Revenue found that the details on each of the returns filed were false. Inland Revenue was advised there had been no courier driver or long haul freight taxable activity and that no vehicles were ever purchased.

In total, Brown obtained $24,045 in payments to which he was not entitled.

"Brown's actions were a deliberate attempt to claim money to which he was not entitled. He was fully aware of the rules and that his actions were illegal. He was funding his lifestyle by making false GST refund claims and he is now facing the consequences of not being honest with his tax affairs," Ms Whitiskie said.

Media Contact:
Sarah-Lee Ryan
04 890 1743
sarah-lee.ryan@ird.govt.nz


Inland Revenue warns customers to beware of fraudulent emails and imitation webpages 
13 January 2014

Inland Revenue is warning customers be alert for fraudulent emails and three separate imitation websites claiming to be from the department.

"The scheme involves customers receiving emails with links to imitation Inland Revenue web pages for Online Tax Refunds. Information on these pages advises customers that 'we automatically pay refunds of $600 or less to you 15 days after the date of your PTS,' said Group Manager Customer Services Eleanor Young.

"We want to make our customers aware that this is scam and a deliberate attempt to use the Inland Revenue logo and brand to steal confidential and personal information. Although the pages look very similar to those on the Inland Revenue website they are most definitely fake.

"Any information that is given to these fraudsters can result in a business or individuals suffering identity and data theft."

Ms Young said that Inland Revenue is aware of the issue and working with the National Cyber Security Centre and the E-crimes division of the Police to get the sites removed. The key thing to remember is that Inland Revenue will never issue a tax refund onto a credit card."

"These imitation website addresses are long and jumbled which show they are not authentic. We remind our customers that if anyone has replied to those behind these scams, and given money or their personal details, they should contact their bank or credit card provider immediately," Ms Young said.

Inland Revenue asks customers to keep their IRD numbers, tax information, online passwords and all other data safe at all times. If you think someone is using an identity fraudulently, or attempting to steal your confidential information, then let the department know.

Information is available on the Inland Revenue website 

To report suspicious phone calls or emails that target Inland Revenue customers, please send an email to phishing@ird.govt.nz

Media Contact:
Sarah-Lee Ryan
04 890 1743
sarah-lee.ryan@ird.govt.nz


Inland Revenue warns customers to ignore fraudulent phone calls
15 November 2013

Inland Revenue is warning customers to be alert for fraudulent unsolicited phone calls claiming to be from the department.

"The phone calls involve someone phoning a customer and asking them if they are aware that they are due a refund or rebate and that they should call an 04 number for details on how to claim their money", Acting Group Manager Customer Services, Patrick Crawford said.

"The number they are asked to call is not an Inland Revenue number but is answered by people saying "Welcome to Inland Revenue how can I help you"."

"To claim their refund or rebate people are asked to make an upfront direct payment to a bank account via Western Union.  This payment is explained as a transfer fee or sometimes as a donation to charity".

Mr Crawford said "Customers need to be aware that this is a scam, Inland Revenue does not call customers to advise them of entitlements and would never ask our customers to pay money in order to claim a refund."

"We ask our customers to keep all their IRD numbers, tax information, online passwords and all other information safe at all times. If it seems too good to be true, it probably is.

"If you are suspicious hang up, don't call the number back and if you have concerns call our customer services team on 0800 227774. Enrolling in Voice ID and registering for an online myIR account is also a good idea to protect your identity with Inland Revenue."

If you have replied to and given money or provided personal details, please contact your bank or credit card provider immediately.

Inland Revenue are actively working with the phone companies to track these numbers and have them closed down as soon as possible.

For further information:
Sarah-Lee Ryan
029 890 1743
Sarah-Lee.Ryan@ird.govt.nz


Minimum family tax credit to rise next year
25 October 2013

The annual amount of the minimum family tax credit that guarantees a family’s after-tax income will rise from $22,724 to $22,776 from 1 April 2014. The new rate was set by Order in Council on 21 October. For more information see the media statement.


Former property developer sentenced for serial tax evasion 
1 October 2013

A Wellington-based former property developer has been sentenced to 12 months home detention, 275 hours of community work and ordered to pay $25,000 after earlier pleading guilty to 28 charges of tax evasion involving just over $979,000.

Paul Andre Kinsman was sentenced in the Wellington District Court today on 25 charges of knowingly filing false GST returns, two charges of knowingly not providing GST returns, and one charge of knowingly failing to provide returns for income tax. All the charges involved the intention to evade the assessment and payment of tax

Acting Group Manager Graham Tubb said that Kinsman is a serial tax cheat who not only used his various companies to evade paying tax from 2003 to 2009 but he also did not file personal income tax returns from 1994 to 2007.

"Kinsman's behaviour, while not sophisticated, was a continuous and deliberate effort to claim money to which he was not entitled by breaking the law. His companies' GST returns contained inflated and double-claimed expenses and these entities were also involved in property sales that were not returned for tax purposes."

Mr Tubb said that one of Kinsman's companies, Portside Limited, entered into a purchase agreement on a property valued at $830,000 which resulted in the company receiving a GST refund of just over $92,000 in 2003. Six months later he claimed the purchase again and the company received the benefit of another $92,000 refund. Despite the purchase not going ahead the company did not reverse the two claims and nor did it repay the money.

"Inland Revenue's investigation also showed that the company claimed expenses with no supporting invoices, or using invoices issued to two different companies, NZ Industrial Holdings Limited and Sun Valley Developments Limited, both of which were controlled by Kinsman.

"This pattern of offending continued in regard to his dealings through Sun Valley and Kinsman used that company to claim invoices that had previously been issued to Portside to claim false refunds.

"His actions also included failing to return GST on a number of properties that another of his companies, Brentwood Park Developments Limited, sold and received settlement on in 2008, not file a return for the sale of a property through Waingawa Limited in 2009, and the evasion of personal income tax of $197,640."

Kinsman was convicted in 2003 in relation to not registering another company as an employer and accounting to Inland Revenue for PAYE and student loan repayment deductions made from an employee's wages.

"Kinsman is a repeat offender and he was fully aware of the tax rules and his tax obligations. Unfortunately he chose to ignore them and it is due to his illegal activity that around $705,445 of taxpayers' money is still outstanding," Mr Tubb said. 

Media contact:
David G. Miller
04 890 1698
david.miller@ird.govt.nz


Serial tax cheat gets home detention, community work
2 September 2013

The sentencing of a former restaurant and supermarket owner on a total of 87 charges in the Wellington District Court today is another warning that Inland Revenue is working hard to catch tax cheats.

Zhenhong Fang was sentenced to ten months home detention, 250 community work and ordered to reparations of $7500 after earlier being found guilty on 54 charges under the Crimes Act of dishonestly using a document for financial gain and 33 charges of aiding his businesses to file false GST returns under the Tax Administration Act.

Group Manager Investigations and Advice, Patrick Goggin, said that Fang's offending involved the deliberate misuse of numerous companies to claim just over $379,000 of taxpayer money to which he was not entitled. This amount remains outstanding.

"Inland Revenue's investigation began in early 2007 after these sixteen companies filed 87 GST returns between April 2005 and September of the previous year. What we found was that exaggerated amounts of income and expenditure had been included in the claims especially on the expenditure side."

Mr Goggin said that Fang was interviewed as part of the investigation and he admitted to being in charge of the companies along with being responsible for filing their returns."

"A search of Fang's home uncovered a large amount of business records and an analysis of the companies bank records showed that only four of them had traded legitimately.

"The remaining twelve companies had recorded significant bank account activity but this was based on deposits and withdrawals being made from each other. No trading had taken place and it became clear that the figures in the returns were completely false."

Mr Goggin said that while the other four companies had traded legitimately, Inland Revenue identified that their expenses were overstated, and that they had therefore received refunds illegally.

"Our analysis also indicated that Fang was using the money to buttress those companies that were still operating businesses. It should be crystal clear that people running any type of business should never attempt to keep that business afloat by claiming false refunds.

Inland Revenue has options available to businesses in financial trouble that do not involve breaking the law. We will continue with a zero tolerance approach to such matters."

Media contact:
David G. Miller
04 890 1698
david.miller@ird.govt.nz


Complex tax evasion case sounds a warning to tax cheats
30 August 2013

Inland Revenue has welcomed the sentences handed to two men in the Wellington High Court today for their involvement in complicated and carefully planned tax evasion schemes.

Group Tax Counsel, Graham Tubb, said that the sentences given to Scott Crawford Anderson and Brent John Gilchrist are a warning that people operating illegal evasion schemes will face serious consequences.

"The outcome of these cases is the culmination of a lot of hard work and dedication by Inland Revenue investigators, legal advisors and digital forensic staff and the Crown Solicitor.

"This was a long running investigation which not only reflects the premeditated and aggressive arrangements set-up to steal taxpayers' money, but the dedication of our people in unraveling them, and seeing that justice has been done.

"Those involved were motivated by greed and ego. Their tactics included issuing false invoices and the use of an offshore bank account, which when used as part of a tax evasion scheme, amounted to fraud as a service, as the Judge said."

Mr Tubb said that the cases are another reminder that those people who provide advice on tax evasion and fraud schemes, and help to facilitate them, are breaking the law as much as those who participate in them.

"Tax professionals such as advisors and agents have a duty to uphold the integrity of the tax system and the vast majority work hard to ensure that those they offer help to are operating within the rules. Unfortunately some will try and cheat the tax system as will those who choose to take that advice.

"Inland Revenue as part of its compliance programme is using increasingly sophisticated methods to detect tax evasion and fraud schemes, and will take action against serious non-compliance.

"Despite their concerted and sophisticated efforts, those involved ultimately failed to stay ahead of the law, they were caught and they ended being convicted."

Media contact:
David G. Miller
029 890 1698
david.miller@ird.govt.nz


Inland Revenue warns customers to ignore fraudulent faxes 
30 July 2013

Inland Revenue is warning customers to be alert for fraudulent faxes claiming to be from the department which could result in the theft of confidential information.

"The scheme involves businesses being asked to complete and return a property disclosure form to someone calling themselves ‘Marcauley Saunders’ who claims to work at Inland Revenue," Group Manager Customer Services, Eleanor Young, said.

"We want to make our customers aware that this is a scam, this person does not work for Inland Revenue, and this is a deliberate attempt to use the Inland Revenue logo and brand to steal confidential and personal information. 

"Any information that is given to these fraudsters can result in a business or individuals suffering identity and data theft and possible financial loss."

Ms Young said that Inland Revenue is aware that the fake documents have been sent to tax advisors and real estate agents and is asking anyone who receives one of these faxes to destroy it immediately.

"This scheme has been used in the United Kingdom and unfortunately it is now being attempted in New Zealand as well.

"We ask our customers to keep their IRD numbers, tax information, online passwords and all other data safe at all times.

"If you think someone is using an identity fraudulently, or attempting to steal your confidential information, please send an email to phishing@ird.govt.nz

"If anyone has replied to those behind these scams, and given money or their personal details, they should contact their bank or credit card provider immediately," Ms Young said.

Media contact:
David G. Miller
04 890 1698
david.miller@ird.govt.nz


Inland Revenue welcomes court decision in complex tax evasion case
26 July 2013

Inland Revenue has welcomed the conviction of three businessmen in the Wellington High Court today involved in complicated and determined tax evasion schemes.

Group Tax Counsel, Graham Tubb, said those involved used offshore bank accounts, false invoices and false deductions to evade tax and repeated restructurings of the principle business to protect and conceal the proceeds of the fraud.

Paul William O'Connor was found guilty on a total of 14 charges, out of 15, of tax evasion relating to filing of false tax returns and evading the assessment and payment of tax by his business entities. Scott Crawford Anderson was found guilty of two charges of aiding O'Connor to evade tax by providing fictitious invoices. Brent John Gilchrist was acquitted of two charges of aiding O'Connor to evade tax.

Gilchrist and Anderson were found guilty of 6 charges of aiding and abetting the fourth co-accused to evade tax through the provision of fictitious invoices.

A fourth co-accused (who presently has name suppression) had earlier pleaded guilty to 6 charges for his part in the offending.

Mr Tubb said O'Connor evaded $1.8 million of tax over a period of 13 years.

"The transactions went well beyond sharp practice or clever accounting. The offenders were individually and collectively fraudulent and were designed to allow a very profitable business pay little or no tax, leaving the burden on other taxpayers.

"This case serves as a reminder that we have placed significant resources into identifying tax evasion arrangements and we take appropriate action when the rules are deliberately broken," Mr Tubb said.

Media contact:
David G. Miller
04 890 1698
david.miller@ird.govt.nz


Livestock tax bill passes
11 July 2013

The Taxation (Livestock Valuation, Assets Expenditure and Remedial Matters) Bill, introduced in September 2012, passed its final stages in Parliament today. The new legislation now awaits Royal assent, giving effect to a range of measures to help improve the integrity of the tax system. Special reports on the changes to the rules on the tax treatment of livestock valuation elections and mixed use assets (assets used both privately and to earn income) will be published on this website following Royal assent.

For more information see the Minister of Revenue’s media statement.


New anti-money laundering regulations welcomed by Inland Revenue
3 July 2013

Inland Revenue has welcomed the new anti-money laundering regulations which came into effect this week.

Manager of International Revenue Strategy, John Nash, said that tax evasion is a predicate offence to money laundering and the regulations will assist Inland Revenue's current compliance programmes addressing the hidden economy and abusive offshore arrangements.

"There are a number of activities that may indicate that an individual or a business entity is laundering money," Mr Nash said.

"This may involve placing funds into children's bank accounts, personal accounts being used for business transactions, multiple transactions through bank accounts without reasonable explanations, and transactions both inwards and outwards with known offshore tax havens.

"Those who think they can operate in the hidden economy and use secrecy havens offshore with impunity should think again.

Not only will transactions be more closely monitored, but the regulations require far more extensive reporting of transactions to authorities, especially by financial institutions, where illegal tax evasion is suspected."

Mr Nash referred to the experiences of other OECD countries that have introduced similar regulations.

"An example of this is the Irish experience where additional tax of over 70 million Euros, well in excess of NZ$100 million, has been raised as a result of tax investigations arising from suspicious transaction reports."

"Governments are continually working towards improving global cooperation and transparency. The new regulations are one step closer to us all achieving that goal," Mr Nash said.

Media contact:
David G. Miller
029 890 1698
david.miller@ird.govt.nz


Trans-Tasman super portability set to go live
31 May 2013

The Australian Government has completed legislative steps that will allow New Zealanders to transfer their retirement savings between complying Australian superannuation funds and KiwiSaver from 1 July. For more information see the media statement and fact sheet.


Tax Evasion results in community service
17 May 2013

A Hamilton man has been sentenced to 280 hours community service after admitting a charge of tax evasion.

Drew William Cocker was sentenced today in the Hamilton District Court after earlier being found guilty of one charge of tax evasion which included the filing of misleading tax returns to claim a GST refund.

Group Manager Investigations and Advice, Patrick Goggin, said that Mr Cocker filed false tax returns for a six month period in March 2012 in his wife’s name, which resulted in a request for a refund of just under $22,000.

"This case is another example whereby someone was caught trying to obtain money to which they were not entitled.  Inland Revenue regularly reviews GST returns and in this case we found that Mrs Cocker was unaware of the returns being sent to Inland Revenue.

"We contacted Mr Cocker who admitted that he had filed the return in his wife’s name and that he had signed the return.

"He claimed that he was under financial pressure and he had forgotten he had recently filed a return and received a refund for his company, D C Building Services, and therefore mixed up that return with the one for his wife."

Mr Goggin said that Inland Revenue’s audit for the six month period showed that the return filed in Mrs Cocker’s name and the company’s returns could not be reconciled.

"The company was entitled to the GST refund claimed and Inland Revenue took appropriate action in this case in which a person’s identity was misused.

"This case is another example of it is easy for Inland Revenue to catch those trying to cheat the system, and even if you make a genuine mistake with your filing or any tax matters, our message is always talk to us first before we have to talk to you."

Media contact:
David G. Miller
029 890 1698
david.miller@ird.govt.nz


Student loan scheme bill enacted 
2 April 2013

The Student Loan Scheme Amendment Bill No. 2 passed its third reading last Thursday and received Royal assent on Friday 29 March. For more information see the Minister of Revenue’s media statement.


Inland Revenue warns customers about hoax phone calls offering tax refunds 
22 March 2013

Inland Revenue customers are continuing to receive hoax phone calls telling them that they are eligible for a tax refund or unclaimed money.

"Unfortunately these calls are continuing and people are still being targeted by these fraudsters," Group Manager, Customer Services, Eleanor Young said.

"Those making the calls may offer a person a tax refund, a grant, or even unclaimed money if they make an upfront direct payment to a bank account via Western Union. There have also been cases when a person has been asked to make the transfer online through a website address while they are still talking on the phone."

Ms Young said that anyone who is contacted, and has suspicions that the call is a hoax, should hang up immediately.

"Those running these scams continue to use the Inland Revenue brand to try to get money from people illegally and they may also be attempting to gain people's personal details such as credit card and bank account details.

Inland Revenue will never ask customers to send money to receive either a tax refund or unclaimed money and we strongly advise people not to transfer funds to the fraudsters under any circumstances.

"If anyone has replied to those behind these scams, and given money or their personal details, they should contact their bank or credit card provider immediately," Ms Young said.

Find out more about phone scams

To report suspicious phone calls or emails that target Inland Revenue customers, please send an email to phishing@ird.govt.nz.

Media contact:
David G. Miller
04 890 1698
david.miller@ird.govt.nz


Extradited accountant jailed for tax fraud
5 February 2013

A Canterbury-based accountant extradited from Australia has been sentenced to three years and three months in prison after earlier pleading guilty to tax evasion, tax fraud and theft involving over $500,000.

Grant Perry McGowan was sentenced today in the Canterbury District Court after he pleaded guilty on 35 charges of failing to deduct PAYE, 19 charges of providing a false document, and 22 charges of theft by a person in a special relationship.

Inland Revenue Group Manager Investigations and Advice, Patrick Goggin, said McGowan deliberately avoided his tax responsibilities between 1998 and 2007 and took advantage of his clients by involving them in a loss selling scheme that he knew to be illegal.

"McGowan abused the relationship he held with his clients and the trust they placed in him by claiming tax refunds on their behalf and depositing them into his personal account. He also used funds intended to pay his clients tax bills for his own benefit," Mr Goggin said.

"Between March 2001 and May 2002, he convinced a number of his clients that they could reduce the amount of income tax that they needed to pay by purchasing tax losses. McGowan knew this activity was illegal and his clients lost almost $448,000 as a result."

Mr Goggin said that he also failed to file PAYE returns between 2004 and 2007 on behalf of his companies employees and nor did he return their PAYE tax as well. In 2006, he misappropriated over $120,000 in funds that clients intended to pay Inland Revenue.

"McGowan’s offending was on the severe end of the scale, which led to his extradition from Australia to face these charges."

"This case is another reminder that Inland Revenue will catch those who are dishonest and deliberately non-compliant and he now faces the consequences of his actions," Mr Goggin said.

Media contact:
Izzi Brown
04 890 1743
029 890 1743
izzi.brown@ird.govt.nz


 
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