Inland Revenue targets cheating real estate agents

Monday, 15 March 2021

Inland Revenue has announced a crackdown on real estate agents who under-report their income or overstate their expenses in order to pay less tax than they should.

The tax department said the industry was the next focus of its ongoing enforcement work to target the “hidden economy”.

“Real estate is one area that is booming during Covid and our analysis of the sector suggests real estate agents commonly claim a high level of expenses relative to their income,” spokesperson Richard Owen said.

“Inland Revenue believes the issue is widespread and we must act. People are claiming private expenditure but not keeping logbooks or other business records to support the claim.”

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Owen said that if IR had concerns someone was over-claiming expenses, they would receive a letter requesting they proved the expenses claimed, for example by providing bank statements, invoices, or a logbook.

He hinted an overhaul of IR’s computer systems could help it track down cheats.

“Inland Revenue is undertaking significant business transformation and modernisation of the tax revenue system.

“One of the intended benefits is making more intelligent use of the ‘big data’ we are collecting so we can identify trends in a timely manner,” he said.

Owen said IR was working with the Real Estate Authority and the Real Estate Institute of New Zealand (Reinz) to “engage and educate their members”.

“We would far rather encourage customers to do the right thing from the start,' he said.

Reinz spokeswoman Dee Crooks said it was “not aware of any specific issues as to why the real estate profession is being targeted”.

“We don’t have oversight of individual members’ financial circumstances because many of them are self-employed contactors,” she said.

The Real Estate Authority has also been contacted for comment.