IRD News

Contractor gets home detention for not paying income tax and GST

Posted 11 July 2016

A Wellington contractor has been given six months' home detention after failing to pay nearly $240,000 in income tax and GST.

Regina Beck had been working as an independent contractor through her company, Ichange Management Consultants Limited. She was the sole director and shareholder.

Ichange didn't register for GST, despite earning more than the $60,000 annual income threshold, but charged GST on the contracting income it earned over a five-year period.

Income tax returns for the years 31 March 2007 to 31 March 2012 showed losses or a small profit, which was offset against losses carried forward. No tax had been paid by Ichange, although it received contracting income of about $700,000.

Inland Revenue Investigations and Advice Group Manager Patrick Goggin said Beck's offending was brazen and sustained, and showed total disregard for New Zealand's system of voluntary tax compliance.

"Most people in Beck's position do the right thing, declare all their income and pay their fair share of tax," Mr Goggin said.

"But for some reason she didn't play ball, and thought she could get away with not contributing any tax towards the social services we all benefit from."

When she was audited, Beck only disclosed work undertaken through a recruitment agency, failing to mention income earned from other sources by herself and Ichange.

An analysis of Ichange's bank statements identified further contracting income of $400,000 which had not been disclosed even after Ichange was put under audit.

It was established that $159,136 of income tax and $79,191 of GST had been evaded. Beck pleaded guilty to all charges.