31 October 2024

Inland Revenue (IR) staff are making unannounced visits to hundreds of businesses who we believe aren’t meeting all their tax obligations as employers.

The visits are another round in IR’s Hidden Economy suite of work and follows on from the successful liquor store campaign in the past year.

Anonymous tip offs

The businesses which will be visited have been identified from the list of nearly 7,000 anonymous tipoffs the department receives each year.

The volume of tipoffs has grown over previous years indicating an increased sense of frustration by the community in general with businesses who are not doing the right thing.

Inland Revenue’s has analysed the anonymous information at a high level. That’s shown the tax risks overwhelmingly relate to taking the cash for personal use without recording sales and/or paying employees in cash.

Risks

Those risks are higher where businesses deal directly with consumers and their goods and services are at a low average price point. The lower the average transaction value, the more likely a customer is to pay in cash.

Also, when businesses handle significant amounts of cash, business owners have a stronger means, motive, and opportunity to choose not to record the cash sales correctly for tax purposes.

Get it Right

Right now, we’re focused on employer’s obligations, and we’ve ended up with nearly 300 employers across various sectors who we’ll be visiting and whose practices we’ll be looking more closely at.

This campaign is part of the Get it Right campaign. Most businesses do the right thing, but there are those that don’t. We are aware of and actively seeking out and prosecuting those who aren't paying their fair share.

Businesses need to keep a record of and declare all income and sales, including any cash sales. It's fine to receive cash payments, so long as those are recorded and reported as income earned in GST and income tax returns.

We can help

We want the businesses we are visiting to understand their obligations and we’ll help them put their affairs right. But we’ll also act on any further non-compliance, with consequences for them.

This is not an audit or an in-depth review, but it is a chance for businesses to explain what they’re doing and get some help in getting it right.

There are also resources online if people need help:
- Get it right
- Register as an employer (ird.govt.nz) – includes Employers Guide IR335 (July 2024)
- Complete my tax code declaration (ird.govt.nz) – IR330 (July 2024)

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