IRD Warnings
There are a couple of new and very active IRD audit programmes running at the moment. Please take a minute to read this and if you think these issues might apply to you please contact us with some urgency.
GST Returns:
Either refunds all the time or nil returns (for a continuous 12 months). The IRD are mining their GST database to find these and then checking if that registration is still valid. If not, they are cancelling registrations and sending large bills (e.g. Land purchased zero rated as part of a business but today’s current market value is $500,000 - GST payback required is $65,000 if registration is cancelled).
They are also searching for change of use of a business asset from business use to either non-use or private use. Both of these generate the requirement for a change of use adjustment and payback of GST.
Income Tax:
Flowing on from the above, if the IRD believe you are not carrying on a business capable of making a profit, then any losses claimed against other income could be cancelled. This could go back multiple years. If this happens, the tax bills could be significant (also potential penalties and interest).
Offshore income is also being checked carefully. Any investment, rental property, superannuation fund or bank account in another country generates a tax obligation in New Zealand. This cannot be hidden anymore, tax departments around the world now talk to each other and share information about those who earn income in their country but who don’t live there.
The IRD have now reactivated their audit teams and they are busy after being quiet in the audit / review space for some time. If you get a letter from the IRD about any one of these matters please let us know immediately and we will respond accordingly for you.
This of course will require some time to respond to the IRD carefully (even if we are 100% correct in the first instance) so it is recommended that you talk to Nicola about Audit Shield Insurance to cover the cost of our fees incurred to respond on your behalf. Once the letter comes from the IRD it is too late to activate the insurance cover.
