2008.12.07 21:21:21
This article was in yesterday’s herald.
In my opinion this just continues to add merit to my argument that you should always stay on the good side of both the ATO and the IRD.
There is no point trying to evade either the ATO or the IRD and any advisor telling you that you can do things that sound too good to be true when it comes to reducing your tax should be questioned thoroughly and I would recommend getting a second opinion.
Getting it wrong can be very expensive when it comes to the IRD and the ATO.
If you are speculating, trading or flipping as those in the industry like to call it in New Zealand get used to the fact that you are going to pay tax on your profits. Don’t try and get around it, you are making a profit so pay tax on it and be happy that you made a profit.
Article follows.
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Property speculators nailed for tax evasion
LOIS WATSON – Sunday Star Times | Sunday, 07 December 2008
AN INLAND Revenue crackdown on tax-dodging property speculators has so far netted an extra $15 million for government coffers.
It has also resulted in five prosecutions for unpaid tax.
And with the campaign due to step up another notch in the New Year when another 10 auditors will begin scrutinising property records, the tax department is urging property speculators yet to disclose their tax liabilities to come forward now.
The department has calculated that more than $300m is owed in taxes on property transactions over the past three years.
“It’s clear from our experiences in the past that quite a number of people didn’t necessarily understand the trigger points that caused a tax liability from buying and selling property,” Inland Revenue assurances manager Richard Philp told the Sunday Star-Times. “Some have known but have felt they could fly under the radar.”
In the 2007 Budget, the IRD received an extra $14.6m over three years to target tax evasion in the property market. Figures obtained by the Star-Times under the Official Information Act shows it has already spent $4.3m and audited more than 4466 property transactions. In five cases those audits have led to prosecutions.
More than 230 property speculators have come forward since the campaign was launched and made voluntary disclosures, thereby limiting or avoiding penalties they may face.
“For the year ended 30 June 2008 we assessed extra tax of $15m through this programme. We also assessed $111.5m in tax from our business-as-usual audits of property transactions,” said Philp.
Extra staff had been brought in to track the tax evaders and a team of about 30 auditors was now working to identify people involved in high numbers of property transactions and to investigate whether they had been paying their taxes. Real estate agents have been asked to hand over sales and purchase information.
“It’s been a clear area of non-compliance,” said Philp. “People entering into property deals with the intention of making profit should pay tax on those transactions.”
New Zealand Property Investors’ Federation president Martin Evans said it was unworried by the steps the IRD was taking to collect money owed under the existing tax regime although it was opposed to any new taxes such as a capital gains tax.
IRD staff had run a series of meetings and seminars for federation members.
“We warn our members that they need to make a clear distinction between properties that are up for trade and properties that are for long-term hold,” said Evans. “People who are buying and trading in property should be well aware of the tax implications and if they owe money to the tax department then should should pay up.”
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