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IRD property probe 'only matter of time'

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  • IRD property probe 'only matter of time'

    29 March 2004
    By LIN FERGUSON

    It was only a matter of time before Inland Revenue mounted a serious investigation into property speculators in Queenstown and Wanaka, Institute of Chartered Accountants New Zealand tax director Annabel Young said.

    "The rapid turnover in property, the huge buying and selling in Queenstown and Wanaka, has been well-documented," Ms Young said.

    Where there was big property interest in buying and selling it followed Inland Revenue would want to tax the gains people were making, she said.

    Even though the law was complex, everyone involved should be making themselves familiar with CD 1 of the Income Tax Act.

    "If they are speculating they must seek the advice of a professional, a chartered accountant. It will save them in the end," she said.

    The move by Inland Revenue to bring four investigative audit teams into the region for an indefinite period of time meant they were there on serious business, Ms Young said.

    "They are there to investigate every taxable activity – let's face it, they're not down for the ski season, it's a bit early."

    People buying and on-selling property should be aware the IRD had a fund of information available to them, she said.

    They were caught because they told someone – maybe just their bank manager.

    "But even if you only tell your bank manager you need a loan for a million dollars for the day while you buy up some property and flick it on, the IRD can go to the bank manager and ask what the money was for."

    It was incredible people tried to get away without paying tax and thought they would not be found out by IRD, Ms Young said.

    Builders, for example, who set up a subdivision where it was quite obvious they were doing to it sell off the land and they knew full well it was a taxable activity, she said.

    People should get wise and know that every day there were stories in all the newspapers about property selling for huge money in Queenstown and Wanaka.

    "You read these stories and you know it's all taxable activity going on so it's not difficult for the IRD to check, is it?"

    There was nothing to be gained by trying to avoid tax, she said.

    "The Inland Revenue are coming in and coming hard. Get professional advice, that's the answer."

    The Southland Times
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