Undeclared tax totalling $45m found in horticulture industry

1News

8 hours ago

Inland Revenue (IR) has found $45 million worth of undeclared taxes in the horticulture industry over the past 10 months.
The tax department also said it had seen some "concerning" practices in the sector, including people being paid under the table.
Inland Revenue spokesperson Tony Morris said paying tax for some in the sector had often become an afterthought with ongoing recovery from Cyclone Gabrielle, increasing compliance costs, and labour shortages.
"Along with paying people under the table, IR is seeing cash sales not being reported correctly (including payments to contractors) and withholding tax not being deducted on schedular payments made, deducted at incorrect rates or not being reported to Inland Revenue."
'While many growers are doing things right, they typically hire labour through a contracting firm, which then frequently pays the labourers in cash. Some of these contracting firms then use convoluted business structures to try and hide those payments.
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"Not only does this mean they could avoid their tax, but it also means the labourers can get benefit payments they aren't entitled to or avoid their child support or student loan payments," Morris said.
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IR recently said it would be intensifying its tax compliance and collection efforts after a significant funding injection in the last two Budgets.
The Government had allocated new additional permanent funding of $35 million a year for Inland Revenue and also continued funding of $26.5 million a year from Budget 2022 that was due to run out in June. A return of $4 for every dollar was expected for the first year with $8 for every dollar from the second year.
Morris said IR was cracking down by requiring contracting firms to withhold tax from their labourers' payments and pay it directly to IR.
"Where Inland Revenue identifies growers and other payers not correctly deducting or accounting for the tax, we are also following these up."
Close to 100 audits of contracting firms were active at the moment, with prosecutions also underway.
"With a high use of cash and migrant labour, the horticulture industry is also a sector open to abuse of workers," Morris said, adding that IR works with other government agencies to address those issues.
'Alongside Hort NZ and Zespri, we work hard to ensure growers and contracting firms are aware of what they need to do to get things right, and appreciate the efforts of the many who do get it right."