Voluntary Disclosures

1. Why make a disclosure to the IRD?

It is a statutory procedure which allows the IRD to reduce the penalties that would otherwise apply if it investigated you and found the tax default you are concerned about. In many cases you can obtain a promise of non-prosecution.

2. What is involved?

A disclosure has to meet the requirements of the IRD’s standard practice statement. This generally requires:

(a) full details of the affected taxpayers;
(b) a full explanation of the defaults and how they occurred;
(c) Sufficient information for the IRD to make an assessment;
(d) Statutory declaration.

3. What savings can I get?

A disclosure that is made before an investigation is notified earns a reduction in penalties of 75% and, in some cases of lesser severity after 17 May 2007, 100%.

A disclosure that is made after an investigation is notified but before it has commenced earns a reduction in penalties of 40%.

4. When is an investigation started?

There are 2 possibilities. The first is at the end of the 1st interview an IRD officer has with the taxpayer after issuing notice of the investigation. The second is when the officer inspects the taxpayer’s information after notifying the investigation and notifying the taxpayer of the inspection.

The earlier of these possibilities applies.

P.  +64 9 307 3993   M.  +64 21 627 737
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E.  geoff.clews@taxcounsel.co.nz