Jenee Tibshraeny: NZ Herald Wellington business editor on New Zealand's overdue tax debt hitting $9.3 billion

The country's overdue tax debt has hit $9.3 billion for the year to June, according to new reports.

It's growing faster than the Government's tax take and New Zealand's overall economy, prompting concern from experts.

NZ Herald Wellington business editor Jenee Tibshraeny explained further.

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Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talks B Follow
this and our wide range of podcasts now on iHeartRadio.
Genative Trainee, the Herald's Wellington Business editor is with us.
Hello Janate. Hi, Ever, how did it get so high?
Is this a COVID related problem?

Speaker 2 (00:24):
Yeah? Look, definitely. During the COVID period, in Land Revenue
focused on supporting businesses to access government support to get
through that period. But now it is it is well
and truly starting to crack down on businesses. For example,
the number of audits it did rose by forty two
percent in the year to June. This helped the department

(00:47):
collect an extra four billion dollars of tax debt. That's
the highest amount since twenty eighteen. So the government has
put more money into Inland revenue. That's somewhere It is
spending more money, and it wants to see a return
on that investment, you know, it wants to see the
department collect up unpaid taxes. Yeah, and how much of
this is accelerating at the rate that it is begure

(01:08):
be cause of interest? You know, that's a good question
and I don't have the answer to that. I did, however,
earlier today speak to an accountant from Baker Tily Staples
Roadway and he ran me through some of the different
ways that businesses are not complying with their tax obligations. So,
for example, he said, a common thing that was happening was,

(01:30):
you know, using trusts to divert income. You know, you
pay income goes into the trust and then you pay
it to beneficiaries you might be your family members and
they have lower tax rates or you know. ID was
looking at businesses that actually make their money in New Zealand,
but then somehow, you know, divert their their revenue so
they pay tax in other countries with lower tax rates.

(01:52):
So that's an issue for example with the with the
tech companies. Yeah, you know tradees. That's another one. People
dealing in property. He said that that's catching out a
lot of people because the property tax rules have changed
so much. For example, now businesses can't deduct appreciation as
an expense on their buildings. So you know, there's there's

(02:13):
all sorts of ways. Property is still about one third
of the audits that the IID is doing is related
to property and about one third in relation to technical things,
and then the rest things like drug trade, you know,
like the hidden economy and fraud. So it's a pretty
pretty broad picture there.

Speaker 1 (02:34):
Yeah.

Speaker 2 (02:34):
Now, I mean I would imagine that as they continue
to chase it, we will continue to see business liquidations
going up. Yeah, yes, yes, I mean the number of
applications and then revenue filed in the past year for
liquidations went up by forty nine percent from the previous year,
so that is a big jump. The accountant I spoke

(02:57):
to suggested, you know, ird is you know, pretty reasonable
and good to work with you if you if you
front foot the issue and try to fix it. But
he said in cases where that isn't the case, it's
it's increasingly you know, happy to pull the plug and
and try to get get the business liquidated. Yeah, but
a tough parenting.

Speaker 1 (03:16):
Hey, thank you very much to know I appreciate it.
Genative training. The heralds Wellington Business Editor. For more from
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