The tax man is coming
After a few quiet years of cutting a lot of slack during Covid, IRD have now found another gear. They are ramping up both on the ‘recover’ side by chasing outstanding tax debt, and on the ‘compliance’ side by taking a more proactive stance on investigations.
Particularly with recovery, it was always just a matter of time before they hardened their stance. And it appears that the time is now – IRD initiated liquidations are surging back to their pre-covid levels. Applications for payment arrangements are facing a much higher level of scrutiny. Because of this, we are making increasing use of tax pooling to smooth out income tax payments. If you want to understand how tax pooling can help you smooth out income tax payments, contact us.
On the investigations side, during the 2022 year, IRD’s target was a return of $7 of additional tax collected for every dollar spent. They blew that out of the wate rand achieved $9.88 for each dollar spent! Just imagine, in your business, if I could get a 9.88 X return for each dollar you spent, what would you do? I’d throw the kitchen sink at it! So, I’m sure we will see more investigation activity.
Contributing to the astounding return on investment of investigation activity is IRD’s technology. They have always been good at collecting data, but until recently, haven’t had a system to synthesize this data. But that has all changed as they are now getting to grips with their new computer system. The previously laborious tasks of sorting data is now automated, which in turn means far more questions are being asked by IRD. And rightly or wrongly, the burden of proof sits in the taxpayer – you. Because of this, over the coming month, we will be sending out an email about Audit Shield, the tax audit insurance we recommend.
Gravy train
While in NZ, we like to complain about the cost of consultants and contractors to government departments, spare a thought for our neighbours across the ditch. Not only have they been paying a fortune for the benefits of ‘a big 4’ consultancy, it transpires that for a number of years, said consultancy was playing both sides by selling off the work they were doing for the government to Big Tech companies
It’s not often that something akin to a soap opera happens in the tax world, so grab the popcorn and settle in! you can read about it here and a little update here.
On a serious note, maybe, just maybe, there is a cautionary tale in here for little ol’ New Zealand…