Data analysis helps IRD net tax dodgers

  • 23/10/2015
Data analysis helps IRD net tax dodgers

By Pattrick Smellie

The tax department is using big data analysis to "reliably predict customers who are highly unlikely to file GST returns on time" and try to help.

Its investigators will also be singling out "high-income individuals, in particular high-income new immigrants" for special attention in the year ahead.

The Inland Revenue Department annual report says "we have changed our processes based on our findings", resulting in "a reduction of more than 98,000 outstanding GST returns during the past year" and plans to contact such customers proactively to try and minimise late filing.

The initiative is just one indication of how digitised the tax system is now becoming, with the numbers of businesses switching to online payments and interaction with the IRD growing by leaps and bounds over the last three years, accompanied by improving satisfaction and performance ratings, along with the first reduction in total overdue tax outstanding in five years.

The number of outstanding tax returns of all kinds was down 21.5 percent in the year to June, continuing a downward trend to the lowest number in five years.

The department's pursuit of tax dodgers has also borne plenty of fruit, with action examining complex finance and trust losses yielding "discrepancies" of $191.1 million, for a return on investment for IRD of $34.10 in tax collected for every $1 spent on investigation.

For the moment, the department was focusing its efforts on "specific areas of non-compliance such as aggressive tax planning, property and the hidden economy and received further funding in Budget 2015 to expand our investigations activity in these areas," the annual report says.

That funding would also be applied to "addressing emerging risks such as high-income individuals, in particular high-income new immigrants."

It says reaction to a campaign last year in just four Auckland suburbs, aimed at tax evasion through cash jobs in the building industry, "was fast, with tax agents reporting a large number of calls from people looking to add cash jobs to the information they had submitted to us."