Harsher tax evasion penalties

Press, 29 August 1989, Page 34

Harsher tax evasion penalties

PA Wellington The penalties for evading tax have been substantially increased since last year’s tax amnesty, the Commissioner of Inland Revenue, Mr David Henry, said. The new penalties for evasion were: a $15,000 fine for each false return, a late payment penalty of 10 per cent added every six months, penal tax of up to 300 per cent of the tax evaded, and publication of the evader’s name along with details of the offence. Mr Henry added the amount of penal tax charged will be increased substantially from September 1, this year. At present the penal tax charged varies according to the circumstances of the particular case but the benchmark used is

100 per cent of the tax evaded, he said. “In respect of investigations or inquiries commencing on or after September 1, 1989, we will be using 150 per cent of the tax evaded as the benchmark. However, we are giving much more generous treatment for people who come forward voluntarily.” People making a voluntary disclosure to the department before any inquiry or investigation has begun will have the penal tax reduced to 25 per cent of the tax evaded, will npt be prosecuted in court and will not have their names published. The new voluntary disclosure policy will be applied to any disclosures made after the amnesty ended on November 11 last year. However the 10 per cent late payment penalty will still be applied.

“People who did not straighten up their affairs during the tax amnesty still have an opportunity to do so because the penal tax will be substantially reduced. However, they will not get as good a deal as the people who came forward during the amnesty,” Mr Henry said. The tax amnesty ran for two months, from September to November last year. The total tax assessed under the amnesty was $26.6 million and was payable by 11,170 taxpayers. Some 24,000 back returns were also filed. Thirteen taxpayers owed more than $lOO,OOO and three taxpayers owed more than $500,000. Not everyone got bills to pay though. Nearly 5000 people got refunds amounting to nearly $3

million. Mr Henry said he was pleased about that. “These people have also straightened up their tax affairs by filing overdue returns and that makes our job that much easier,” he said. Inland Revenue has beefed up the number of people working on audit of taxpayers and has substantially increased the amount of taxes assessed. In the last three years taxes assessed from compliance work have increased 96 per cent from $285 million in 1987 to $560 million in 1989. Anyone wishing to make a voluntary disclosure to Inland Revenue should contact the manager or other senior officer in the verification unit of the nearest district office of Inland Revenue.