Home Mortgage Centre Online buyers and sellers cough up $1 million

Online buyers and sellers cough up $1 million

Jenha White,  Tuesday, 16 March 2010 11:30

Inland Revenue has collected $1.16 million of tax from online traders who buy and sell on websites such as Trade Me.

Inland Revenue has completed 50 online trading specific audits, since 2007 and reviewed more than three million online trading transactions since 2006.

Inland Revenue group manager assurance Martin Scott says Inland Revenue is committed to ensuring a level playing field, so that online traders don't compete unfairly against others in business.

It now has a second part of its awareness campaign underway and it is currently in the process of contacting 225 suspected tax evaders.

"For people that cheat on their taxes, there are significant penalties including a 150% penalty and the possibility of criminal prosecutions."

He says online trading transactions are electronically recorded so discrepancies are able to be detected using sophisticated data analysis.

"We also have a very good relationship with companies running online trading websites and they understand the need for those using their sites to be aware of their tax obligations and work with us to achieve this."

Inland Revenue is considering a number of cases for potential prosecution, but at this point there are no completed prosecutions.

"We encourage people who know they've failed to disclose information or provided false information to come forward and make a voluntary disclosure before they hear from us, as disclosure can considerably reduce exposure to penalties and interest."

Scott says Inland Revenue will continue to:

• run awareness campaigns for online traders, especially people who have recently started trading, explaining how the tax laws apply to them
• contact those people we identify as making significant online sales to explain their obligations, provide clear information to determine if they are operating as a business and encouraging them to comply
• investigate people who have high volumes of sales and those who have a history of non-compliance