WC CFO TheStrategicCFO#44 Online NZ Final - Flipbook - Page 1
Jayesh Kumar
Director, Tax Services
William Buck
Specialising in both personal and corporate tax matters, Jayesh has worked with
a variety of clients including multi nationals, property developers, investors in real
estate, high net worth individuals and legal professionals. The tougher and more
complex the issue, the more Jayesh enjoys analysing the situation and delivering
a solution that often has a life-changing impact.
To contact Jayesh please email: jayesh.kumar@williambuck.co.nz
An IRD audit is an examination of your financial affairs by the Inland Revenue
Department, to ensure you’ve paid the right amount of tax and you’re
complying with tax laws.
An audit can be anywhere from a
simple check of your GST registration
to a comprehensive examination
of business and personal records.
The Department could select you for
an audit for a number of reasons. For
example, the department’s analysts
might have identified that information
in your tax return is somewhat unusual
or inconsistent with industry norms.
he Department might have received
a tip off that suggests your tax return i
s incorrect or could be investigating
due to past compliance history.
Or, it could simply be that the IRD is
currently focused on your industry.
If you do find yourself in the unfortunate
position of being selected for an audit,
don’t worry, the worst consequence is
probably the inconvenience. Below,
we outline some tips on how to deal
with the audit and IRD investigators
throughout the process:
1. A visit from the IRD
The IRD may decide to visit your
business premises without notice.
Always ask for identification and
take the investigators’ business cards.
Don’t answer any questions from an
IRD investigator without seeking advice
from a professional tax advisor. Take
the investigators’ contact details and
arrange a time to meet with them
and your tax advisor.
4. Consider making a
voluntary disclosure
Don’t allow the investigators to take
any original documentation. Insist
they make copies if they require
the information.
If you become aware that you’ve filed
an incorrect tax return, it’s best to front
this early in the audit process. You can
also make a voluntary disclosure ahead
of a compliance review or audit. Ensure
that you have complete information to
make a disclosure and understand the
likely costs associated with disclosure,
such as interest, penalties and additional
tax. One major advantage in making a
voluntary disclosure is that any penalties
will be reduced by 75% to 100% in
some circumstances.
2. Interviews with IRD
investigators
It is strongly recommended that you
do not attend interviews without a
professional tax advisor. Being audited
demands specialist expertise as it
generally involves complex tax laws.
For the best chances of successfully
passing the audit, ensure representation
from your tax advisor.
Ask the IRD in advance for a list
of questions it wishes to raise.
This provides opportunity for you
to prepare the relevant information
and seek professional advice.
3. Providing information
Provide information promptly to
demonstrate to your IRD investigator/s
that you take tax compliance seriously.
If you require more time, let the
investigator/s know and negotiate
a revised timeframe to provide the
requested information.
5. Consider using tax
pooling
If you receive a notice of reassessment
due to an IRD audit or voluntary
disclosure, consider tax pooling to pay
what you owe. The Department will
apply surplus tax paid on the original
due date against your tax liability
when you pay via tax pooling. As
such, this is treated as if you’d paid
on time, eliminating any interest
and late payment penalties.
An IRD approved provider can reduce
the interest cost by up to 30% on any
additional tax payable, resulting in
considerable savings.
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