Inland Revenue cracks down on cash jobs
Builders have been given a last chance warning by Inland Revenue to get their tax obligations in order or face prosecution.
Inland Revenue spokesperson Richard Philp said the department would work with people to do the right thing. Otherwise it would find them, and start follow-up action.
“Most people and businesses in New Zealand pay tax in full and on time but there is a core group who don’t,” Philp said.
“We’re not blind to the fact that businesses in the construction sector have struggled with increases in the cost and availability of materials, and labour shortages over the last few years. But we also know that while some are struggling just to keep up with the everyday grind, others are actively avoiding their tax obligations.”
Tax debt is high in the construction sector and under-declaring income, often via cash jobs, was commonplace, he said.
“Each year across all sectors, we get nearly 7000 anonymous tip-offs about cash jobs and the like. Construction is the industry most often anonymously reported to Inland Revenue. That shows a level of concern by New Zealanders and their belief that paying the correct amount of tax is the right thing to do.”
Philp said the department took a “softly, softly” approach during the Covid-19 pandemic but that had changed.
“We ran a campaign last year to help construction business do the right thing and now we’re taking an even firmer approach.
“The message is cut the excuses, ask us for help if you need it, and don’t stick your head in the sand or you could find yourself talking to someone from our audit team, or worse still, staring down a prison sentence as several people ... have this year.
“Now is the last chance for people working in construction to sort their tax affairs and avoid finding themselves before the courts.”
Emails would be sent to 40,000 construction taxpayers with outstanding tax debt, overdue tax returns, or both.
About 2500 would receive a text from the department offering help to get their tax arrears sorted, he said.
Compliance officers would also make site visits in high construction areas in key locations throughout the country. Auditors would also be looking to select a number of firms and individuals to follow up and investigate.
“Do the right thing and get your outstanding debt and returns sorted now,” Philp said.