logo
Businesses warned as tax department cracks down

Businesses warned as tax department cracks down

1News16 hours ago
Businesses are being urged to get their books in order and be ready to answer probing questions as the tax department increases its focus on compliance.
Business consultancy EY said this year's government Budget saw an increase to Inland Revenue's (IR) funding for enforcement, in the order of $64 million, with the intention of boosting collection activities and driving tax compliance.
EY tax leader Dean Madsen said the increased funding would likely see increased scrutiny of taxpayers in New Zealand, beyond checking that a tax return is correct.
"(IR) will want to understand how you got there," he said adding that technology, data and processes will be important, as well corporate governance.
The morning's headlines in 90 seconds, including deadly Texas floods, Australian woman attacked by a lion, and Elon Musk's new political party. (Source: 1News)
ADVERTISEMENT
"Prove that you have a system with the requisite integrity."
He said IR's focus would be go beyond business to include specific sectors such as property, organised crime, the hidden economy and trusts.
"The changes could be seen as a warning for New Zealand businesses, who need to be ensuring their tax practices are fully compliant to avoid both the financial implications and the reputational risk of noncompliance," he said.
"Businesses should be making certain their tax structuring is adhering to IR's expectations, auditing previous years, and consistently seeking advice - because, with increased scrutiny from IR, businesses can't afford not to."
Madsen said IR had a clear mandate to become more active in enforcement, adding the department was expected to eventually generate $8 for every dollar it invested in the process.
By RNZ's Nona Pelletier
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Are NZ banks being taxed properly?
Are NZ banks being taxed properly?

1News

time10 hours ago

  • 1News

Are NZ banks being taxed properly?

The Government is looking at whether banks in New Zealand are taxed appropriately. Finance Minister Nicola Willis said she is continuing to receive advice from IRD on how income tax laws applied to the major banks in New Zealand, particularly compared with Australia. Willis asked for the advice last year, but said no announcements would be made until Budget next year. The key issues were around how the "parent banks" and branch banks in New Zealand interacted for tax purposes. She said there was some "very arcane and complex tax law" in that area where the OECD had guidance, but New Zealand operated slightly differently. ADVERTISEMENT Willis was also looking at the Australian "major bank levy" which New Zealand did not have. This forced banks with more than $100 billion in liabilities to pay a levy to the government, raising significant sums a year. Willis would not rule out applying something similar here, but she did confirm the Government was not looking at a windfall tax. "There's a range of highly technical, highly complex issues with the way that banks are taxed, and we're just doing a check in to make sure that it's resulting in an overall fair system." Willis said it was possible more revenue could be generated for the Crown if the Government found banks were not paying the full amount of tax expected. Acting Prime Minister David Seymour was asked about the issue on Monday and said he believed banks were being fairly taxed. "Some of the biggest taxpayers in New Zealanders are banks," he said, and stated they were all paying the 28% average tax rate as their company tax. "There's nothing to suggest that they are not paying the same share that they would if they were any other kind of business." ADVERTISEMENT Asked about Willis' work, Seymour said, like most ministers, she was "always asking for advice, always tossing around the ideas". He suspected the result of that work would show banks were fairly taxed. Seymour said, from what he saw, there seemed to be a "consistent pattern" in terms of what banks paid, and the question around any proposals to change the settings would need to be based on "fairness". He pointed to a dairy, retail or manufacturing company that were doing "pretty much the same stuff, making the same profit and paying the same tax, would you treat them differently"? "One of the core principles of taxation is that 'like taxpayers pay tax alike', and 'unlike, taxpayers pay tax un-alike' based on the size of the difference. "So you'd start with fairness as your principle." He acknowledged there may be more information he was not aware of. He also wanted more information on the major bank levy. "I've seen the argument for that, and it goes something like this: Banks inevitably get bailed out. ADVERTISEMENT "If they're so big that their failure would affect the entire economy, maybe they should be putting something aside for that rainy day, if it happens one day. That's the argument. "It's, in a way, a form of de facto deposit insurance." He said it was an interesting argument, but would need to see the detail before deciding on supporting a proposal or not as ACT leader.

Businesses warned as tax department cracks down
Businesses warned as tax department cracks down

1News

time16 hours ago

  • 1News

Businesses warned as tax department cracks down

Businesses are being urged to get their books in order and be ready to answer probing questions as the tax department increases its focus on compliance. Business consultancy EY said this year's government Budget saw an increase to Inland Revenue's (IR) funding for enforcement, in the order of $64 million, with the intention of boosting collection activities and driving tax compliance. EY tax leader Dean Madsen said the increased funding would likely see increased scrutiny of taxpayers in New Zealand, beyond checking that a tax return is correct. "(IR) will want to understand how you got there," he said adding that technology, data and processes will be important, as well corporate governance. The morning's headlines in 90 seconds, including deadly Texas floods, Australian woman attacked by a lion, and Elon Musk's new political party. (Source: 1News) ADVERTISEMENT "Prove that you have a system with the requisite integrity." He said IR's focus would be go beyond business to include specific sectors such as property, organised crime, the hidden economy and trusts. "The changes could be seen as a warning for New Zealand businesses, who need to be ensuring their tax practices are fully compliant to avoid both the financial implications and the reputational risk of noncompliance," he said. "Businesses should be making certain their tax structuring is adhering to IR's expectations, auditing previous years, and consistently seeking advice - because, with increased scrutiny from IR, businesses can't afford not to." Madsen said IR had a clear mandate to become more active in enforcement, adding the department was expected to eventually generate $8 for every dollar it invested in the process. By RNZ's Nona Pelletier

China Rejects 'False Narratives' On Pacific Military Base Claims
China Rejects 'False Narratives' On Pacific Military Base Claims

Scoop

time17 hours ago

  • Scoop

China Rejects 'False Narratives' On Pacific Military Base Claims

China says it is not interested in geopolitical competition, warning that its cooperation with Pacific Island nations "can never be erased by smears". This is the response from the Chinese embassy in Fiji after reports last week that quoted Fijian Prime Minister Sitiveni Rabuka as saying China's military bases were "not welcome" in the region. During his National Press Club appearance in Canberra, Rabuka was repeatedly pressed by reporters about China's influence in the Pacific. While he praised President Xi Jinping as a "great leader", he said as long as he was leader, China would not be allowed to have a military base. However, he said Beijing had proven that it does not need a base outside China "to be able to launch what they have into any other area of the world". In a statement, China's embassy in Fiji said that claims about Beijing setting up a military base in the Pacific are "false and driven by ulterior motives". "China has always regarded Pacific Island Countries as good friends, good partners, and good brothers," the spokesperson for the embassy said. "China has no interest in geopolitical competition, or seeking the so-called 'sphere of influence'. There is no political strings attached to China's assistance, no imposing one's will onto others, and no empty promises." According to the ABC, Australian government assessments warn that China is seeking a security foothold in the Pacific, potentially through "dual use" infrastructure projects which could be used for military purposes. Australia's Pacific Minister Pat Conroy has repeatedly said publicly that Beijing is seeking a security "presence" in the region, including through its attempts to expand police cooperation in the Pacific, the state broadcaster reported. According to the Lowy Institute's Mihai Sora told the ABC that Rabuka's statements showed he was not on the same page as Australia when it came to Beijing's objectives. "My takeaway was that the prime minister fundamentally does not want to recognise China's strategic intent," he said. "Despite earlier acknowledging China's designs to increase influence, he doesn't connect that influence with seeking greater military access," he said. "Australia still needs to do far more to achieve alignment in strategic world views, even… among our closest Pacific security partners." But the Chinese embassy in Fiji said Beijing has been building roads and building bridges, and addressing development needs that respond to people's urgent needs. The spokesperson for the embassy said China advocates for all countries to uphold Pacific Island countries' autonomy and prioritise development. "China always believes that the Pacific is the homeland of the people of Pacific Island Countries, not the backyard of big powers outside the region. "The Pacific is a stage for cooperation, not a battlefield for vicious competition. It makes no sense to view China's sincere help to Pacific Island Countries from the narrow perspective of geo-competition." China tested an intercontinental ballistic missile in September that flew over Fiji to land 11,000 km from China in the international waters of the Pacific Ocean.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store