Tax Commentary

Are you taking on a new client?
Has IRD announced a risk review or audit/investigation on your client?
Do you have a client with unknown related entity and/or land transactions?

At an early stage of providing tax advice, our standard practice is to run a detailed search of New Zealand based entity structures, land and other public information and collate it into clear and logical reports on structure and land transactions.

We frequently identify information of which our legal and accounting colleagues were unaware.

From time to time we find missing information such as land transactions, incorrect shareholding etc that is critical to clients’ tax position.

We have found land held in a different entity to what professional records show, clients who hold assets using variants on their name (swapping first and last names, splitting or joining up multi syllable names, changing letters – g for q, ij for y etc.).  Our search processes identify these and you can be sure so do IRD’s.

We are pleased to offer these Reports to fellow professionals as a standalone service. All reports will generally identify related party structures or land transactions such as individual to company or trust etc.  For examples and pricing see https://owenstax.com/what-we-do/partner-support/

If a NZ tax resident wants to cease NZ tax residence, they must satisfy two tests:

• They must be physically outside of NZ for more than 325 days in a 12-month period, whereupon they may cease NZ tax residence from the first of those days. Note that the days of absence do not need to be consecutive, but even an hour in NZ on any day is counted as a day in NZ
• They must cease to have a ‘permanent place of abode’ in NZ. This does not mean bricks and mortar as such although availability of residential property (whether or not owned) is an important factor.

People who should know better sometimes try to distill these down to simple concepts but there can be subtle issues in interpretation.

Read on “Ceasing NZ residence for tax purposes”

Owens Tax Advisors Limited has been in practice since late 2002. Since then we have been referred and assisted dozens of clients facing IRD risk reviews and audits, often involving significant amounts of GST, income and other taxes. For the vast majority we have been able to negotiate significant reductions in core tax, penalties and interest and avoided court, prosecution and expensive legal fees.  The few exceptions were all people who came to us far too late.

IRD maintains a database of high profile cases that do result in prosecution. 

https://media.ird.govt.nz/articles/?tags=Court%20cases

Dont be one of them….

We have lodged a complaint with the Commissioners office that IRD claims that tax may be overdue when it isnt, while simultaneously failing to record tax that is actually due.

In the meantime if a taxpayer underpays tax, whether deliberately, or in error, or even if they are tricked by IRD as above , IRD charges 8.35% and often late payment penalties on top.

Whereas if a taxpayer overpays their tax, IRD pays at best 0.81% per annum.

See: www.ird.govt.nz/topics/income-tax/interest-on-overpaid-and-underpaid-duties-and-tax

Read on “IRD chasing fictitious debt”

Inland Revenue has recently confirmed that it has been exchanging financial information with overseas financial institutions and revenue authorities

See for example two IRD media articles in November 2019:

https://media.ird.govt.nz/articles/ir-updates-its-compliance-focus-on-multinationals/

https://media.ird.govt.nz/articles/no-place-to-hide-overseas-income/

IRD has also begun a letter writing campaign:

• referring to the above strategy,
• IRD has received financial account information concerning foreign accounts from one or more jurisdictions in the 2018 and/or 2019 year
• Inviting a voluntary disclosure

We thoroughly agree with IRD’s approach to this apart from neglecting to recommend they get expert advice, instead recommending taxpayers contact IRD directly (like inviting you to watch a YouTube video to find out how to remove your own appendix).

We have published articles on these matters previously

If you do get one of these letters we invite to you contact us immediately at info@owenstax.com

Under the link below we have reproduced the text of a typical letter from IRD

Read on “IRD chasing foreign sourced income”