Tax-dodging New Zealanders cheated the country out of at
least $80 million tax on undeclared income last year - and
Inland Revenue admits it will never know the full scale of
The Inland Revenue Department has revealed it received about
177 tip-offs a week from disgruntled Kiwis about earnings
Major industries investigated included construction,
property, accommodation, restaurants, retail and wholesale
Of the cases the IRD has been told about, the difference
between what tax was reported and what the IRD calculated
should have been paid reached $82.6 million in the year to
That's enough to feed more than 375,000 families of four
based on the average amount spent on food in Auckland. It
could have funded more than 8000 breast cancer surgeries,
1650 open heart surgeries, the redevelopment of children's
hospital Starship twice over or the rebuilding of the
quake-damaged Christchurch Cathedral.
The department investigated 513 cases and found 414 had
discrepancies. Forty-four resulted in prosecutions and the
remainder resulted in outcomes including "shortfall
penalties" - a total of $4.4 million was handed out -
enforced repayment plans and warnings.
Last year saw a bigger discrepancy at $115.8 million from 656
cases investigated. A $117.7 million difference from 710
cases was reported in 2010.
The IRD did not have statistics on how much of the
discrepancy had been recovered through the court system,
creditors or its own staff, but said the full amount was
"Often people are in pretty dire straits when they start
evading tax by not paying PAYE and GST - they're often up
against the wall financially already," the IRD's group tax
counsel, Graham Tubb, said.
There were cases of tax evasion the department might never
find out about, he said.
"Persons in the community who are choosing not to pay their
tax deliberately are creating a degree of burden on the rest
of the taxpayers. There's no question about that.
"What we don't know is how many people aren't paying their
fair share and how much that is ... We're never going to be
able to provide a satisfactory answer to that."
The maximum sentence for evasion under the Tax Act is five
years' imprisonment and/or a $50,000 fine, but the IRD can
also prosecute under the Crimes Act, which can result in a
seven-year prison sentence.
The cases covered a range of people, including trades people
doing cash-in-hand jobs and people with funds overseas not
declaring their bank deposit income.
The department had received 4608 tip-offs from the public
over alleged tax evasion to June 30.
Revenue Minister Peter Dunne said the 2012 Budget allocated
the IRD an extra $78.4 million for the next four years to
deal with the hidden economy, debt collection and unfiled
$82.6m evaded, 513 cases investigated
$115.8m evaded, 656 cases investigated
$117.7m evaded, 710 cases probed in
20104608 tip-offs to IRD
$50,000 fine/5 years' imprisonment
under Tax Act
7 years' imprisonment under Crimes Act