Yesterday, I talked about Big Mistake 2 – Being On Inland Revenue’s Most Wanted List
Let’s talk a bit more about how to stay clear of the IRD spotlight.
Let’s talk about tax, baby 🎵
Tax evasion is tax dodging, plain and simple. Whether it’s earning cash and sticking it under the mattress or receiving money in your bank account and not declaring it – it’s illegal.
And if you get caught, you could wind up in jail.
🔍 Could the IRD realistically catch you…?
Uh… yes. There are people sitting at desks at this very moment whose job is to catch tax evaders.
And, of course, these people aren’t manually flicking through paperwork anymore; they’ve got some pretty advanced technology on their side, too. These computers have access to data from banks, companies, housing and land registries, social media sites, Trade Me, the lot.
That means they can quickly identify anomalies, such as people who seem to buy an awful lot of niceties but aren’t declaring much on their tax returns.
⚠️ A cautionary tale
I’d like to share an example of a client who came to me after his luck finally ran out. He managed to go undetected for 13 years. Well, we all know that 13 is an unlucky number, and that was particularly true for this client.
I helped him get his affairs in order, submitting the backlog of unpaid tax returns to the IRD. But what was utterly painful was the fact that the penalties and interest charged amounted to more than the tax he owed.
Ultimately, he paid double what he would have by being aware of his tax obligations.
If that’s not a lesson worth learning from someone else’s mistake – I don’t know what is!
⏰Make timely payments to IRD
Also, don’t make the silly mistake of paying the IRD late. The interest charged by IRD can be exorbitant, often outweighing bank mortgage rates. Schedule it in your online calendar, stick it to your fridge, train a pigeon to alert you – just remember to pay your tax bill.
But also, do not overpay tax. Refunds include interest, but at a lower rate than you’ll get in a savings account.
⚔️ Tomorrow, lets talk more about the power of the IRD and the weapons it holds when it comes to tax evasion
