You Can't Escape

Sun (Auckland), Volume II, Issue 400, 7 July 1928, Page 24

You Can't Escape

THE INCOME TAX COLLECTOR IS NOT SO BLACK AS HE IS PAINTED ... AN AMUSING NOTE ON AN ANNUAL “ROUND-UP”. . .

Written for the Sun by Li. J. CRONIN

Bgjjyl HERE was once an ungaS dertaker who placed the LQ} slogan above his door: “You may dodge me all vs}' your life, but I'll nail you In the end.” Directly opposite his shop was the office o£ the income Tax Collector; and one dark night the slogan was mysteriously spirited from one side of i;he Street to the other and erected above the door of the taxation office. So pleased was the undertaker with the singular adaptability of his shingle, and so shaken from his funereal dignity, that he offered it to the Taxation Commissioner as a permanent warning to evasive income tax payers. Hut that was many years ago; and, besides, it was not the door of the New Zealand Income Tax Department. Yet a gamble with long odds against the Taxation Department is almost as much a losing certainty as would be a community effort to force all undertakers into liquidation. Any one of the 85,000 people in New Zealand who are obliged to furnish, annually, a return of their complete income is liable to err in the compilation of the amount; every one of the 49,000 who pay income tax probably regards it as one of life’s greatest vicissitudes that there is taxation at all. “There was no income tax when father was a boy,” the family man sighs as he sits up long after his wife has retired, and struggles with the huge salary return sheet, splashing ink over the paper in his enthusiasm to record all exemptions. ALL MEN ARE HONEST But what if he neglects to mention the- 200 company shares which he secured as a reward for services given; or if he forgets all about the bonus he received from the boss at the Christmas vacation? In a little while he will be asked

by the Taxation Department about a payment of £75 recorded in Blank and Co.’s books. And did he forget that transaction on the Stock Exchange. If he consistently ignores this invitation to adjust his return, there will come a day when the serene abandon in which he mows the front lawn will be shattered by the delivery of a blue paper seeking—nay, demanding—an explanation before a magistrate. It might result in the loss of a tenpound note, or it might easily be worse! But court is t ie last resort of the income tax collectors. Their duty is to inspect rather than suspect, and to detect errors more than to look for crooks. In the eyes of the .State all men are honest until they have proved themselves to be otherwise. And even then the department is lenient in its demand for expiation. In a small country like New Zealand it is a difficult and a dangerous business to fix the books to fool the Government, and during the past de cade many big business men have fallen by the wayside of discretion in their attempts to colour their correct financial position. THRICE TAXED About eight years ago there was, in fact, a complete rodeo of Income Tax inspectors, who engaged in a lightning round-up of careless and shrewd taxpayers. Prosecution followed prosecution with precise rapidity and the taxation purse bulged as a result. But although prosecutions against evading taxpayers are not everyday occurrences, many mistakes are rectified quietly —at great expense to the misguided ones. It frequently happens that a man is discovered to have committed gross breaches of the Land and Income Tax Act by giving false returns over a period of years. It is perhaps by chance that the inspector falls upon his bank receipts—it may be that he inspects them deliberateely —or discovers accidentally a little savings bank account tucked away from the prying eyes of the world. If the case is a serious one the authorities exercise the full scope of the penal clauses, and offer the man

the alternatives of paying triple tax, or of going to court. Think of it! Triple tax—and perhaps for the full five years he has been faking his return! Very little escapes the notice of the Income Tax inspector. The power given him under the Act is so wide, and affords him access to so many avenues of finance and commerce, that in the great majority of cases the reckoning is but a question of time. Winnings in art unions and other sweeps are not assessable as income —modest investors overseas are proportionately gratified—nor are company dividends, and bequests. Gifts, too, are excluded, though gift, duty applies over a certain amount. A man who won £5,000 in an overseas sweep some years ago spent a very anxious few days until he discovered that he was not liable for excess profits tax. He was, in fact, wondering whether he was the most fortunate or the most miserable of men. LESSONS IN ACCURACY

In Auckland three inspectors are kept going continuously investigating the affairs of the income earner—from the butter and wool magnate clearing £50,000 annually to the man on the £3OO a year mark —and as this province embraces one third of the Dominion’s population, their task is not a bed of roses. Each inspector, in fact, handles probably from 150 to 200 investigations annually. Prosecutions have produced an educative effect upon the people of New Zealand in the correct return of income figures, and errors in the amounts received by men on the lower and middle line salaries are accidental rather than intentional. The high-salaried man is usually a business figure of some standing, and greater accuracy is expected of him. In some professions there is trouble in correct assessments. Doctors and others, unreconciled to the idea of book-keeping, would at one time estimate their income at a round figure; but the hard school of experience has taught several of them a lesson in painstaking accuracy. Sometimes —though the officials say not often—the department benefits from incorrect returns. A man without any intention of speculation bought a section recently, and was later compelled to sell. He did so qt a small profit, and recorded the profit as assessable income. This was an error, but it never would be detected by the department. Land transactions in New Zealand are watched with infinite care, and speculative moves or suspected speculations, are taxed with a rigidity which only the State can apply. Many people lose money in their land tax assessment by failure to mention their mortgages, merely giving the value of their land, the revenue and other essential particulars. And after all, the department officials are not disposed to search the mortgage deeds for them! THE KNOCK-OUT Some juggle their stock sheets; others insert fictitious names on their pay rolls; but the money has to go somewhere, and the quietly insistent inspector is always nearby. Some become annoyed. “The Income Tax Department does not possess the morals of a cat sitting beside a bloater,” snorted an irate business man recently when he received his demand for tax.

He was peeved because he could not get away with it; but when it was explained to him that he was losing money by an incorrect return, his faith in human nature and Income Tax Departments was almost restored. Wage-earners, too, sometimes slip. One young man sent in a return roughly estimating his income at £350. He was shocked a little later to receive a note: “Your income for last, year is shown by the books of Blank and Company to be £416.” It was a knock-out; but then the collector, like the undertaker, will nail you in the end.