Property investors beware - IRD investigation starting
Property investors who have not paid enough tax on their transactions need to beware. The Inland Revenue Department has been given $15 million to investigate all residential property sales since 2002.
Monday, March 17th 2008, 12:00AM
by The Landlord
Already the department had done reviews in parts of the Auckland and Queenstown markets and found $105 million in unpaid taxes on property sales.
“The IRD is looking closely at property transactions that have occurred in the recent past to make sure that everyone pays the right amount of tax and meets their tax obligations,” IRD assurance manager Richard Philp says.
He says there is no time limit on an investigation if someone hasn’t declared all their income, whether from property transactions or other sources, but adds, “We generally do not go back more than four years in our investigations”.
“Anyone who thinks they should have paid tax on the sale of a property but didn’t, should consider making a voluntary disclosure,” Philp says.
“Some shortfall penalties may be reduced in full and others may be reduced by 75% if people come forward before we contact them.”
Auckland Property Investors Association chief executive Dianne McAteer says the department are “deadly serious” about this and be “little leniency (will be) shown” if investors have dodged tax.
However, she says IRD have been given permission to be lenient with penalty interest “if you are found to have missed paying taxes due on property sales, and to find a workable payment schedule on unpaid taxes.”
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