Increased scrutiny for the horticulture sector
Inland Revenue has issued a rare alert highlighting significant tax compliance concerns in New Zealand’s horticulture sector. It highlights key issues such as cash payments to workers, complex contracting structures including shams, false invoicing, and failures to meet schedular payment obligations.
Inland Revenue has signalled increased scrutiny of growers, contractors and subcontractors, including GST registration applications, outstanding tax debt, and the use of exemption certificates and tailored tax rates. It has warned that non-compliant businesses may face reassessments, debt recovery action, prosecution, and information sharing with other enforcement agencies.
In the year ended 30 June 2026, Inland Revenue opened around 130 investigations into horticulture businesses, identifying approximately $7.2 million in tax discrepancies.
GST: Directors or board members who provide services through a personal services company
Inland Revenue has now confirmed that a personal services company (PSC) can generally register for GST when it supplies the services of a director or board member to clients, even though an individual director or board member may not be able to register for GST in their own right.
The key distinction is the PSC is supplying an individual to perform the director's role, rather than itself acting as a director. Where the PSC contracts directly with the organisation and carries on a taxable activity, it may register for GST and must do so if its taxable supplies exceed the $60,000 threshold. The same outcome may also apply where the director contracts personally with the organisation but, is an employee of the PSC, and required to remit the director's fees to the PSC. In those circumstances, the fees may be treated as consideration for a supply made by the PSC and therefore form part of the PSC's taxable supplies.
Home detention for Working for Families (WFF) fraud
An Auckland woman has been sentenced to eight months’ home detention for falsely claiming nearly $190,000 in WFF tax credits over seven years despite being married and living with her husband. The court found the offending was deliberate, and that it appeared to be motivated by greed rather than financial necessity.
Gisborne couple sentenced for tax fraud
A Gisborne couple has been sentenced for failing to disclose their relationship status and business income, resulting in more than $81,000 in incorrect WFF payments and over $122,000 of unpaid income tax and GST. One partner was sentenced to seven months’ home detention and the other to just over five months’ community detention.
