7 Mar 2013

31 March deadline for tax dodgers

7:10 am on 7 March 2013

Taxpayers who paid lower taxes by diverting their income have until the end of March to come clean with the tax department.

Inland Revenue granted a concession to make a voluntary disclosure after the Supreme Court's decision in the Penny and Hooper case in 2011.

Orthopaedic surgeons Ian David Penny and Gary John Hooper had entered into a tax avoidance arrangement, by incorporating their businesses and drawing a salary that enabled them to pay tax at a lower rate.

IRD said on Wednesday that people who have used a similar company or trust structure to artificially lower their incomes have until 31 March to notify IRD.

If people make a voluntary disclosure in time they will only be required make adjustments for the last two income years that the taxpayer filed before 24 November 2011, when the concession was made.

Those who do not come forward may not only incur penalties but Inland Revenue may reassess their tax position over four years.

By the end of February more than $7 million had been collected from more than 270 taxpayers with similar situations to Penny and Hooper.

Accounting specialist Craig MacAlister said that if the IRD find out that someone has deliberately lowered their income, it can be defined as tax avoidance and they may have to pay double what they would have otherwise paid.