Wednesday, October 19, 2011
The New Zealand Inland Revenue has issued a revenue alert advising people that they are required to declare all income from foreign sources.
It is concerned that some people are structuring their affairs by using entities such as offshore trusts, foundations and companies to make their income appear to be outside the New Zealand tax system.
Revenue alerts are issued by the Commissioner of Inland Revenue to provide information about significant or emerging tax planning issues.
Group Tax Counsel, Assurance, Graham Tubb said that Inland Revenue was aware of New Zealand tax residents who may have taxable offshore income held in an offshore bank account, which is accessible in New Zealand, and that this income may not be returned in New Zealand for income tax purposes.
The Inland Revenue says that it is carrying out audits on a number of New Zealand tax residents who have offshore credit or debit cards and who have been found to hold offshore bank accounts or receive offshore income.
Mr Tubb warned that if people deliberately divert income into an offshore bank account to evade or avoid the payment of tax, or to claim a greater amount of Working for Families Tax Credits, they may be committing criminal offences under the Tax Administration Act 1994.
"Inland Revenue is working in close collaboration with the revenue authorities of other countries to reduce the use of offshore bank accounts and offshore schemes to misrepresent income or assets and evade tax in this country. We have signed 18 tax information exchange agreements, with more under negotiation. These agreements give us access to key ownership and banking information," he said.
"Failure to declare offshore income or to make appropriate disclosures to Inland Revenue can attract serious penalties. Penalties may be reduced by making a voluntary disclosure," said Mr Tubb.