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 (00:00):
Genative training. 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 (00:07):
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

(00:31):
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.

Speaker 1 (00:48):
Yeah. And how much of this is accelerating at the
rate that it is because of interest?

Speaker 2 (00:55):
You know, that's a good question and I don't have
the answer to that. I do, however, earlier today, speak
to an accountant from Baker Tillly 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, you know,
using trusts to divert income. You know, you pay income

(01:18):
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. So
that's an issue for example, with the with the tech companies,

(01:40):
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 depreciation as an expense on their buildings.
So you know, there's there's all sorts of ways. Property
is still about one third of the audits the ID

(02:01):
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 (02:17):
Yeah, Now, I mean I would imagine that as they
continue to chase it. We will continue to see business
liquidations going up.

Speaker 2 (02:22):
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 to suggested,
you know, ID is you know, pretty reasonable and good

(02:44):
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 try to
get get the business liquidated.

Speaker 1 (02:59):
Yeah, but a tough pairing. Hey, thank you very much
to you. I appreciate it. Genative trainee, the heralds Wellington
Business Editor.

Speaker 2 (03:04):
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