The taxman is calling. Here’s how to get on top of it.
August 12, 2024
Earlier this year, Inland Revenue issued a warning to the construction industry, calling for payment of overdue taxes and debts. The construction sector was targeted specifically because close to a sixth of the total outstanding tax debt, worth almost $900 million, is owed by 40,000 businesses or individuals operating in this industry.
This zero tolerance stance will even impact tradies who take on cash jobs, with the IRD using new tools to crack down on sources of income outside regular tax returns. They’ll be monitoring bank accounts and electronic payment service providers to spot when payments have been made, as well as following up on thousands of anonymous tip-offs per year.
What does this mean for contractors and businesses who owe tax, or haven’t filed a return?
Back in April, the IRD said it would give businesses in the sector a couple of months to get on top of their tax obligations. That time has now passed. Our advice is don’t wait for the IRD to call on you. They are willing to provide help to those who reach out proactively and ask for support, but those who don’t come forward or try to evade payments will face audits, legal action and in some cases, prison sentences.
Failure to pay tax on time could also mean that fines and interest charges are added to what’s already owed, so it’s best to get things sorted as early as possible.
You may have already received an email or letter from the IRD to ask if you’d like support to get your outstanding tax sorted. They’re also checking in with around 2,500 people via text to offer help, and those who answer “yes” will be contacted by phone. As always, check to make sure it’s really the IRD on the phone and if in doubt, get their number from the official website and give them a call.
The good news is that other support is available for those who have fallen behind. The IRD has created a Tax Toolbox to help tradies nail their tax, at https://www.ird.govt.nz/the-tax-toolbox. This includes online resources and videos, and you can also put in a request for a business advisor to talk you through everything you need to know to run your business smoothly.
There are also some good accountants out there who can help you get your tax ducks in a row and coach you on how to use DIY accounting software. The key is to do the right thing and get on the phone with IRD before you get an unwanted call from them.
