Tax Evasion: Land And Income Tax Act: Eplanation Of Amendments

Gisborne Herald, Volume LXXVI, Issue 22916, 7 April 1949, Page 3

Tax Evasion: Land And Income Tax Act: Eplanation Of Amendments

“The Land and Income Tax Act, 1923, provides for a fine on summary prosecution of up to £IOO in respect of various offences, and in addition there is power for the Commissioner to impose Penal Tax up to three times the amount of the tax evaded by means of false returns or the non-furnishing of returns.” This statement was made today by the Commissioner of Taxes, Mr. F. G. Oborn, in the course of explanation of various provisions appearing in the Finance Act (No. 2) 1943, which was passed during last Parliamentary session. “One of these provisions relates to publication in the Gazette of names of persons who have been convicted of furnishing false returns of income or who have been charged with Penal Tax in respect of such offences,” continued the statement. Prior to the passing of the Finance Act (No. 2) 1948, the Commissioner of Taxes was required to publish the names of all offenders in the Gazette, but he is now given authority to omit from that list in the Gazette the names of those taxpayers who have voluntarily disclosed the fact that returns as furnished by them were false. Such disclosure must be entirely voluntary in the sense that it must be made before any enquiry or investigation has been commenced by the Department.

It is the practice when charging a penalty by way of Penal Tax to take a much more lenient view when the taxpayer voluntarily discloses the fact that his returns of income are false. In such cases of voluntary disclosure criminal _ charges in the Magistrate’s Court will not be instituted, and there will be no publication in the Gazette of the names of such persons. It is therefore in the interests of any person who has made false returns to make a full disclosure to the commissioner or to any branch superintendent. Publicity and court fines will be avoided, and any penalty imposed will normally be of a moderate amount approximately equal to interest for the period over which the offence has continued.

The' Income Tax Department has now established branch offices throughout New Zealand and is increasing the number of travelling investigating accountants whose principal duty it is to detect offending taxpayers who have either made false returns or who have failed to render returns to the department. With the resulting v/ider coverage of New Zealand, the way of the transgressor is made still more difficult. If he elects to take a chance and is discovered by the department, then he can blame only himself for any resulting court proceedings and fines, and subsequent heavy penal tax. Retention of Business Records Attention is drawn to a new section requiring any person or company carrying on business to keep proper records and to retain such records for a period of at least seven years, and it is pointed out that any failure to comply with this requirement constitutes an offence "punishable by the appropriate penalties as prescribed in the Land and Income Tax Act, 1923. This section states that every person carrying on business shall keep sufficient records in the English language to enable his assessable income and allowable deductions to be readily ascertained by the commissioner or any officer authorised by him on that behalf, and shall retain all such records so kept after the passing of the Act, and all records relating to that business in existence at the passing of this Act, for a period of at least seven years after the completion of the transaction, acts or operations to which they relate. For the purpose of the section the term "records” includes books of account recording receipts or payments. or income or expenditure, and also includes vouchers, invoices, receipts, and such other documents as are necessary to verify the entries in any such books of account. Every person who fails to comply with this section commits an offence against the principal Act. Social Security Charge Instalments The social security charge on income other than salary or wages which was previously payable in four quarterly instalments, is now payable in two equal instalments on July 1 and November 1 eacli year. This first applies to income other than salary or wages by persons other than companies during the year ended March 31, 1949. the charge thereon being payable by equal instalments on July 1, 1949, arid November 1, 1949. Companies will continue to pay, as in the past, in one instalment on the due date as advertised each year.