Thursday, 19 November 2009

tax investigations

this morning i went to a course for work - we accountants have to complete a certain number of continuing professional development. and today we got to hear (amongst other things) about the work IRD are doing around tax investigations and audit. you'll find some of the figures here, the key one being that tax investigations resulted in the IRD netting $1.269 billion.

the biggest culprits are "large enterprises", which is to be expected because they would be paying the largest amounts of tax and so developing schemes to avoid paying. the banks were particularly busy in this area, given the recent court cases that went against them. if anything, this proves that the IRD should be focussing most of it's efforts here, as this is where they will get the most returns.

i found it interesting (but i guess that's just me) to hear about the way the IRD has changed the way they select cases to be investigated. it used to be a pretty random approach, but now they use all sorts of sophisticated statistical modelling based on particular risk factors. which means they've been able to be more efficient in their work, and that is a good thing.

however, i can tell you that being audited by the IRD is not a nice experience. luckily, any audits i've been involved with have gone pretty smoothly. it's all about having good paperwork to back up your position and seeking proper advice when it comes to extra tricky positions. but even then, having someone combing through all your work can be stressful, especially when any errors could lead to significant penalties and interest for your client.

what surprises me though, is that only 10% ($127 million) of the take is from cases of tax evasion and fraud. i would have though this would be a higher percentage, but there you go. either the fraudsters are too clever to be caught or there aren't quite so many of them as there are people who are just making mistakes or getting it wrong.

amongst the interesting stuff i've been reading recently, i found this paper giving a maori woman's perpective on the piano. what surprised me the most is that i just didn't notice the negative portrayal of maori in the film when i watched it, being distracted by the main story i guess.

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