United front to combat abuse of the cash economy
United front to combat abuse of the cash economy and simplify tax
Partnerships with Inland Revenue are making tax compliance easier for partnered industries, whilst also helping tackle tax abuse in the cash economy.
Since July 2002, Inland Revenue has been working alongside specific industries to help businesses in the cash economy to meet their tax obligations. The positive way in which these relationships have developed has led to Inland Revenue extending relationships to 10 industries and being in negotiations to partner with a further five.
Inland Revenue's Naomi Ferguson says early results from the Industry Partnership initiative indicate that the approach is effective.
"In the year 2002-03, tax debt owed to Inland Revenue by the first 'industry partners' (electricians and painters) decreased by almost 20% and three times more of these industries' members made arrangements to repay tax owing," said Miss Ferguson, General Manager of Service Delivery.
Ray Barbara, General Manager of the Electrical Contractors Association of New Zealand (ECANZ), says Inland Revenue's partnership with electrical contractors has been well received by ECANZ members who are keen to see industry tax issues resolved, including non-compliance.
"Through the relationship with Inland Revenue, members have access to a wide range of support and services, including staff who are knowledgeable in tax matters affecting our industry," Mr Barbara says.
"Our members feel that it is unacceptable for electricians to do cash jobs because it leads to unfair competition and honest businesses lose out. It is clear to us that electricians offering 'under the counter' cash jobs tend to be less reliable in terms of the quality of their work as well," Mr Barbara says.
"Consumers have very little recourse if they pay cash for a job that goes wrong or turns out to be unsafe."
The courts also take tax evasion seriously. A man who filed false GST returns and defrauded more than $1.3 million, was jailed for seven years. The judge said: "Stealing from [Inland Revenue] is really stealing from the community. Everyone in society who pays their tax does so as a community levy expecting it to be utilised for the benefit of the country and the community as a whole. It is not for filling the private pockets of somebody*".
Miss Ferguson says Inland Revenue is committed to working alongside industries to make it as easy as possible for members to comply with their tax obligations - where all other efforts to encourage compliance fail, Industry Partnership will be proactive in prosecuting those who deliberately evade taxes.
"Industry members appear to really appreciate the support and services being provided. Already, debt levels for our initial two industry partners have decreased and the signs so far are encouraging that measures such as prosecution will be the exception to the rule."
For more information about Industry Partnership
call the direct phone line on 0800 TAX TALK (0800 829 825).