Millions of unpaid property tax discovered: Inland Revenue

The Inland Revenue (IR) has identified a significant tax shortfall in the property sector, with at least $150 million in unpaid taxes discovered in the first nine months of the current financial year. This includes undeclared income tax and GST from developers, property investors, and individuals subject to the bright-line test.

Developers and GST bills are the main sources of discrepancies, totaling $153.5 million, similar to the previous year’s findings. IR has noticed a trend where property developers claim tax refunds for costs incurred but fail to pay taxes when the properties are sold.

IR is taking swift enforcement action when discrepancies are identified, with a 48% increase in discrepancies from developers compared to the previous year. Additionally, a campaign has been launched to educate individuals on their tax obligations under the bright-line rules, resulting in $3.68 million in voluntary disclosures.

The rise in discrepancies related to companies and individuals manipulating land use or ownership transfers to avoid GST obligations has also been noted. IR’s automated tools and analytics have detected a 39% increase in discrepancies in this area compared to the previous financial year.

Overall, IR is actively addressing tax non-compliance in the property sector and urging individuals to fulfill their tax obligations to avoid enforcement actions.