Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on New Zealand's overdue tax debt hitting $9.3 billion

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Jenee Tibshraeny: NZ Herald Wellington business editor on New Zealand's overdue tax debt hitting $9.3 billion · Best of Business

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  Speaker 1: Genative Trainee, the Herald's Wellington Business editor is with us.
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  Speaker 1: Hello Janate. Hi, Ever, how did it get so high?
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  Speaker 1: Is this a COVID related problem?
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  Speaker 2: Yeah? Look, definitely. During the COVID period, in Land Revenue
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  Speaker 2: focused on supporting businesses to access government support to get
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  Speaker 2: through that period. But now it is it is well
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  Speaker 2: and truly starting to crack down on businesses. For example,
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  Speaker 2: the number of audits it did rose by forty two
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  Speaker 2: percent in the year to June. This helped the department
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  Speaker 2: collect an extra four billion dollars of tax debt. That's
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  Speaker 2: the highest amount since twenty eighteen. So the government has
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  Speaker 2: put more money into Inland revenue. That's somewhere It is
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  Speaker 2: spending more money, and it wants to see a return
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  Speaker 2: on that investment, you know, it wants to see the
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  Speaker 2: department collect up unpaid taxes. Yeah, and how much of
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  Speaker 2: this is accelerating at the rate that it is begure
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  Speaker 2: be cause of interest? You know, that's a good question
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  Speaker 2: and I don't have the answer to that. I did, however,
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  Speaker 2: earlier today speak to an accountant from Baker Tily Staples
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  Speaker 2: Roadway and he ran me through some of the different
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  Speaker 2: ways that businesses are not complying with their tax obligations. So,
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  Speaker 2: for example, he said, a common thing that was happening was,
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  Speaker 2: you know, using trusts to divert income. You know, you
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  Speaker 2: pay income goes into the trust and then you pay
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  Speaker 2: it to beneficiaries you might be your family members and
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  Speaker 2: they have lower tax rates or you know. ID was
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  Speaker 2: looking at businesses that actually make their money in New Zealand,
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  Speaker 2: but then somehow, you know, divert their their revenue so
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  Speaker 2: they pay tax in other countries with lower tax rates.
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  Speaker 2: So that's an issue for example with the with the
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  Speaker 2: tech companies. Yeah, you know tradees. That's another one. People
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  Speaker 2: dealing in property. He said that that's catching out a
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  Speaker 2: lot of people because the property tax rules have changed
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  Speaker 2: so much. For example, now businesses can't deduct appreciation as
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  Speaker 2: an expense on their buildings. So you know, there's there's
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  Speaker 2: all sorts of ways. Property is still about one third
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  Speaker 2: of the audits that the IID is doing is related
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  Speaker 2: to property and about one third in relation to technical things,
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  Speaker 2: and then the rest things like drug trade, you know,
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  Speaker 2: like the hidden economy and fraud. So it's a pretty
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  Speaker 2: pretty broad picture there.
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  Speaker 1: Yeah.
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  Speaker 2: Now, I mean I would imagine that as they continue
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  Speaker 2: to chase it, we will continue to see business liquidations
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  Speaker 2: going up. Yeah, yes, yes, I mean the number of
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  Speaker 2: applications and then revenue filed in the past year for
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  Speaker 2: liquidations went up by forty nine percent from the previous year,
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  Speaker 2: so that is a big jump. The accountant I spoke
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  Speaker 2: to suggested, you know, ird is you know, pretty reasonable
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  Speaker 2: and good to work with you if you if you
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  Speaker 2: front foot the issue and try to fix it. But
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  Speaker 2: he said in cases where that isn't the case, it's
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  Speaker 2: it's increasingly you know, happy to pull the plug and
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  Speaker 2: and try to get get the business liquidated. Yeah, but
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  Speaker 2: a tough parenting.
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  Speaker 1: Hey, thank you very much to know I appreciate it.
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  Speaker 1: Genative training. The heralds Wellington Business Editor. For more from
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