Inland Revenue (IRD) says its turning its hidden economy focus investigation on to the real estate sector.
The tax department says the investigation will include "both the under reporting of income and the overstating of expenses".
Inland Revenue spokesperson Richard Owen outlined why the focus is shifting to the sector.
“Real estate is one area that is booming during Covid-19 and our analysis of the sector suggests real estate salespeople/agents commonly claim high level of expenses relative to their income.
“Inland Revenue believes the issue is widespread and we must act. People are claiming private expenditure but not keeping logbooks or other business records to support the claim.
“If we are concerned that someone has overclaimed expenses, they will receive a letter from us requesting they prove the expenses claimed. Things like bank statements, invoices, a logbook and any other information to confirm the expense is deductible."
Owen says IRD prefers if people contact them first if they believe they may be affected.
“Our approach is to raise awareness and self-help materials first. We would far rather encourage customers to do the right thing from the start. In this respect we have several tools available to assist, including providing in house presentations.
“So, we recommend people approach us before we contact them”, Richard Owen says.
Inland Revenue says its working with the Real Estate Authority (REA) and the Real Estate Institute of New Zealand (REINZ) to engage and educate their members.
As a business owner, you can also tell Inland Revenue voluntarily about your own tax situation especially if you think there’s something wrong with your tax returns because you’ve overclaimed expenses.
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