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Compliance focus on undeclared cash

March 8, 2016

In 2016 the IRD will be continuing their compliance focus on undeclared cash in the construction industry and hospitality sectors, building on existing educational and enforcement action.

The IRD initial construction sector campaigns in early 2015 focused on the trades in Auckland. This work has been broadened to cover all of New Zealand. Similarly, the hospitality sector is under the spotlight – IRD suggest that tax advisors may be approached by clients operating in these sectors asking what they should do about undeclared income and in particular cash jobs.

IRD are continuously improving processes to identify non-compliance, and analysis indicates some taxpayers are significantly under-reporting income. To correct this IRD will continue their education and where appropriate, take enforcement action for those who don't comply.

IRD want to help people comply voluntarily and avoid penalties, use-of-money interest and even prosecution and are encouraging people to:

  • file accurate returns of income
  • provide details of all income from all sources
  • deposit all business income into their business bank accounts
  • make a voluntary disclosure, if necessary.

There are benefits to an early voluntary disclosure of any undeclared income, for example:

  • shortfall penalties can be reduced by up to 100%
  • you can avoid prosecution action in most cases.

If you have any concerns about undeclared income please contact us as soon as possible so that we can help you – before the IRD come calling…..

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