Businesses warned as IRD cracks down
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Businesses are being urged to get their books in order and be ready to answer probing questions as the tax department increases its focus on compliance.
Business consultancy EY said this year's government budget saw an increase to Inland Revenue's (IRD) funding for enforcement, in the order of $64 million, with the intention of boosting collection activities and driving tax compliance.
EY tax leader Dean Madsen said the increased funding would likely see increased scrutiny of taxpayers in New Zealand, beyond checking that a tax return is correct.
"(IRD) will want to understand how you got there," he said adding that technology, data and processes will be important, as well corporate governance.
"Prove that you have a system with the requisite integrity."
He said IRD's focus would be go beyond business to include specific sectors such as property, organised crime, the hidden economy and trusts.
"The changes could be seen as a warning for New Zealand businesses, who need to be ensuring their tax practices are fully compliant to avoid both the financial implications and the reputational risk of noncompliance," he said.
"Businesses should be making certain their tax structuring is adhering to IRD's expectations, auditing previous years, and consistently seeking advice - because, with increased scrutiny from IRD, businesses can't afford not to."
Madsen said IRD had a clear mandate to become more active in enforcement, adding the department was expected to eventually generate $8 for every dollar it invested in the process.
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