New Zealand Tax Agency Clarifies Shortfall Penalties for Suppressed Cash Sales in GST and Income Tax

• New Zealand Inland Revenue issued a Technical Decision Summary clarifying tax evasion penalties for suppressed cash sales
• The taxpayer operated a restaurant and was registered for income tax and GST
• Tax Agency determined taxpayer fraudulently suppressed cash sales and underreported GST and income tax
• Tax Agency reassessed income tax and GST and imposed shortfall penalty
• Taxpayer filed a Notice of Proposed Adjustment disputing reassessments
• Tax Counsel Office found Tax Agency could make reassessments without NOPA
• Taxpayer failed to show reassessments based on bank statements and POS system data were incorrect
• Taxpayer not entitled to certain deductions due to lack of records
• Taxpayer not entitled to GST input deductions after another company took over business
• Compliance investigation was not predetermined
• Taxpayer likely evaded tax

Source: news.bloombergtax.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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