Restaurateur gets six months home detention for tax evasion

Award-winning Christchurch restaurateur Jonathon Charles Schwass has been handed six months’ home detention for not passing on his employees’ tax deductions.

Schwass failed to pay Inland Revenue $265,689 in PAYE, child support, student loan, and KiwiSaver deductions over a 21-month period.

He was convicted and sentenced on 21 charges relating to BTS Restaurants Ltd in Christchurch District Court on Friday and ordered to pay $130,000 in reparation. Of this, $13,870 will be directed to his former employees’ KiwiSaver accounts to cover the KiwiSaver employer contributions he had not paid.

Inland Revenue spokesperson Tony Morris says Schwass had used the money he deducted from his employees’ wages to pay creditors to keep trading.

“Mr Schwass was effectively using money that should have gone toward paying for important social services as a free loan to keep his business afloat.

“That’s completely unacceptable – the money employers deduct from staff wages is held in trust on behalf of the Crown. It’s not theirs to use, because it belongs to taxpayers.”

Mr Morris says Schwass had been in business for many years and fully understood his tax obligations.  He says an analysis of the BTS Restaurant's bank accounts showed there were sufficient funds to make the payments in eight out of 21 monthly periods.

“We got in touch with Mr Schwass only a couple of months after the first payment was missed, warning him of the consequences of non-payment, yet he continually failed to meet his obligations.”

BTS Restaurants was moved into liquidation on May 12, 2017.

An estimated $1.1 million was owed to creditors, $573,000 of which is owed to IRD, $400,000 owed to related parties and $63,000 to suppliers.

High overheads and lower than expected turnover were cited as key reasons the business became insolvent.