Inland Revenue's new commissioner, Naomi Ferguson, has set her sights on tax cheats hiding their money abroad as part of the department's bid to boost the government's revenue collection.
That emerged from the IRD's latest compliance focus report, an annual roadmap published to raise tax awareness among the public and highlight any specific areas targeted in the year ahead.
This year's report included many of the areas typically focused on such as under reporting and hiding wealth in trusts, but also has an emphasis on untaxed assets sitting in offshore accounts.
Ferguson, who has just finished her first month in the new role, said it was a growing area of interest because globalisation and an increasingly mobile workforce meant it wasn't just the wealthy that held offshore assets.
"The world is a lot smaller place than it used to be and more people are doing things that have international implications," she said.
Part of the complexity around offshore accounts stemmed from Kiwis being taxed on their worldwide income, meaning tax is still applicable even if offshore funds that are never repatriated to New Zealand, she said.
This year's compliance report is the first to be published since the release of the Budget in May, where the Government allocated $80 million to the IRD over four years to improve its tax collection mechanisms.
The IRD collected $46.8 billion in the 2010-2011 tax year, accounting for more than 80 per cent of core Crown revenue at the time - a level the Government is looking to lift in order to return its budget to surplus by its 2014-2015 financial year.
The systems put in place by these funds will boost risk profiling techniques and data matching capabilities among the 20 offshore finance centres the department has signed tax information agreements with so far.
Corporate taxes fall within the spotlight, particularly those of multinationals who operate under multiple tax rules.
The report's aim is to encourage voluntary compliance on both offshore and domestic funds, according to Deloitte chief executive Thomas Pippos. It was a further shift towards proactive modern tax collection strategies and away from "random auditing", he said.
"The two themes... are the critical importance of self-assessment and juxtaposing this, to bring out those taxpayers that clearly don't comply, including through transactions that take place outside the tax net," he said.
Just how much money is escaping the tax is net is unclear but New Zealanders rank among some of the most compliant taxpayers in the OECD, Ferguson said.
She cut her teeth working for tax authorities in Northern Ireland, New Zealand and the UK in a career spanning 20 years, and said an ongoing challenge for the department was recognising societal changes and adapting collection systems accordingly so that everyone
paid their fair share.
Other areas being targeted by this year's compliance report include the "hidden economy" or payments taking place under the table, complex financing arrangements, habitual non-compliance, misuse of charity status, fraud, under reporting, as well as improved ease of filing.
- ? Fairfax NZ News
Source: http://www.stuff.co.nz/business/money/7532479/IRD-eyes-offshore-funds
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