IRD the Cash Economy (and Potential Repercussions)

The IRD has announced that it is targeting the cash economy as it seeks to increase the Government’s tax revenues by identifying tax payers looking to avoid paying tax through the use of cash transactions.

The Department has indicated that it is targeting selected industries including hospitality, scrap metal, fishing, aquaculture, tourism and horticultural industries.

The repercussions of being caught for tax evasion are severe as the following example highlights.

Tax payers found to have evaded paying tax will be subject to IRD penalties including an evasion shortfall penalty of 150%, by way of example therefore a taxpayer found to have evaded income taxes to the value of $10,000 will end up with income taxes and penalties to pay of $25,000 when the evasion shortfall penalty is applied. The IRD will issue an amendment for the outstanding tax and penalties owed and if these are not paid when due further late payment penalties and interest will apply.

Note that the income tax penalties applied by the IRD are in addition to any criminal proceedings initiated.

Tax payers seeking to evade paying tax have been warned.

2011-10-04T09:00:20+00:00October 4th, 2011|Accounting|