Inland Revenue discovers millions in unpaid tax from property developers and investors
The largest discrepancies were from developers and GST bills.
Photo:
123RF
Inland Revenue (IR) says the property sector failed to pay at least $150 million in tax in the first nine months of the current financial year.
The department said it had found more than $150m in undeclared income tax and GST. It had been looking at the tax affairs of developers, property investors and people whose sales were captured by the bright-line test.
The largest discrepancies were from developers and GST bills.
The $153.5m discrepancy is about the same as the amount found in the whole of the year before.
IR said there was a pattern of property developers claiming significant tax refunds when they incurred costs, but not paying tax when the properties sold.
"Where we expect a GST payment from a property sale and we don't see the sale in the return, we contact the developer to make enquiries. If there is no response or no return filed, we will take enforcement action quickly.
"In the financial year to date we've found $72,937,921.00 in discrepancies from developers - a 48 percent increase on the same time last year."
IR said it had been running a campaign helping people understand their obligations under the bright-line rules.
"We're telling people that if they've sold a property recently, they should check the property tax decision tool and work out if they need to pay tax. So far this year IR has helped more than 550 customers with bright-line issues and processed $3.68m in voluntary disclosures.
"The discrepancy found in the bright-line area is $14,152,162 - a 9 percent increase."
It said there was also a growing issue involving companies and individuals making transactions that needed GST accounted for.
"Sometimes they are changing the intended use of the land or frequently transferring ownership between entities with or without GST registrations. These actions appear to be attempts to circumvent their GST obligations.
"We see non-compliance or errors early, using our automated tools and analytics. Our work in this area so far, this financial year has found $59,959,470.00 in discrepancies - a 39 percent increase for the same time last financial year. "
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