It’s important that New Zealanders understand that Te Tari Taake Inland Revenue is adapting rapidly to new risks and taking firm action on wrongdoing and fraud. We have continued to target resources to areas where the risks are greatest.
This year, our systems and intelligence tools prevented potentially incorrect and fraudulent claims across large volumes of returns.
We have begun to move on from prioritising COVID-19 support to a more typical range of enforcement activities. However, COVID-19 support products have remained a focus.
We have been reviewing support payments and loans made between 2020 and 2022. 860 cases were selected after analysing all customers who received support and identifying industries at highest risk of improper use. These included ride-share and taxi drivers, courier drivers and construction workers.
$18.5 million in funds has been recalled from the 600 customers reviewed so far. The reasons for recalls mainly related to:
- customer mistakes such as not applying payments correctly to business expenses
- customers who did not experience the required drop in revenue.
New areas of risk have continued to emerge from criminal uses of internet technologies.
In December, the Commissioner issued a Revenue Alert over the development, promotion and use of electronic sales suppression tools that are designed to alter point-of-sale data. These tools exist only to evade tax and launder money.
Revenue Alerts provide information about a significant and/or emerging issue that threatens the integrity of the tax system.
We’ve been investigating these tools and upgrading the technologies our digital forensics team uses to support this work. Going into 2023–24, we’re taking an assertive approach to identify both users and promoters.
The reprioritisation of compliance work while we delivered COVID-19 support has had a flow-on effect on new prosecutions being taken by Te Tari Taake Inland Revenue. 8 fewer cases were before the courts at 30 June 2023 than in June 2022.
This year, customers have been taken to court for offences such as failing to account for PAYE, providing false information with the intent to evade the payment of tax and dishonest use of a document.
We publicised the outcomes of several cases to illustrate the actions we take when dishonesty has led to harm to New Zealanders.
High-profile cases included a New York property developer turned Canterbury winery owner who pleaded guilty in March 2023 to tax fraud involving $1.3 million in false GST returns. He was sentenced to 3 years and 7 months’ imprisonment.
In September 2022, a businessman and musician from Tāmaki Makaurau, Auckland was imprisoned over nearly $2 million in tax evasion gained through not paying employees’ deductions for income tax, KiwiSaver and student loans.
A long-term indicator we monitor is the extent to which customers believe that, if someone tries to avoid paying the right amount, they will get into trouble with us. 79% of customers believed so this year, the same as in 2021–22.
Overall, we identified $973.4 million in revenue through our range of compliance activities.
Compliance results at 30 June 2023
- 3,608 audits were completed.
- 2022: 3,080.
- $8.92 was the return on every dollar spent on compliance activities.
- 34 prosecutions were completed.
- 2022: 38
- 2021: 50
- 2020: 58.
- A further 85 cases are before the courts.