Nearly 30,000 New Zealand businesses have applied to the Inland Revenue for relief due to the recession.The IDs' latest annual Compliance Focus, released this morning, shows 29,520 New Zealand firms have had to make instalment arrangements with the depart
Nearly 30,000 New Zealand businesses have applied to the Inland Revenue for relief due to the recession.
The IDs' latest annual Compliance Focus, released this morning, shows 29,520 New Zealand firms have had to make instalment arrangements with the department because the economic downturn has meant they cannot make their regular provisional and other tax payments.
The total amount being paid off in this fashion is just over half a billion dollars - $546 million.
The impact of the downturn will extend into the financial year just begun, says Commissioner for Inland Revenue Bob Russell.
“These are the things you would expect in recession and we’re trying to make it as easy as possible for people to make instalment payments.”
There is a warning there though not to use the recession to create paper losses so as to avoid tax.
“That’s an area of ongoing focus – we know there will be legitimate losses during the recession but there will also be other people looking to create losses and perhaps hoping we won’t notice.”
Some of this could be a lack of awareness, suggests the IDs' Compliance Focus.
This is the first recession since 1998 and for many firms it will be the first time they have made a loss.
“Many may not have incurred losses previously and won’t know the rules. Recent compliance monitoring of loss activity has identified several common errors, including mismatches between the loss brought forward and the loss available to carry forward, and non-compliance with the loss carry forward and offset rules.”
“While the majority will be genuine trading losses, our experience from past economic downturns suggests some will be artificially created through schemes that either increase expenses or suppress income.”
