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If it looks and smells dishonest, it probably is 17 May 2013

“She pays the tax on all the income but only declares half the amount for rest home subsidy purposes,” we were told.

This looks rather like fraud.

Likewise, you can’t just transfer your money on paper only, to another person.

Husband, wife and partner arrangements can work differently.  If you run a joint account with your spouse, with regular money paid into it such as your salary or business drawings, the money paid in changes its character. It becomes joint money. If you invest money from that account, the investment is a joint investment.

The same person said: “I reinvest my dividends so I don’t get any money and therefore it’s not income”. 

This isn’t true.. There are two steps. Firstly you are credited with a dividend (income). Next the money is reinvested in the company. However, as New Zealand dividends have been fully taxed, their omission isn’t going to save any tax at present rates. There could be an issue, however, as to whether omitting income is supplying a false tax return. It has been suggested, if income is omitted, even if it made no difference to the tax, it enables the IRD to reopen your tax return long after it would normally not be entitled to do so.

If you’ve got an idea which has the smell of dishonesty, it probably is dishonest. If you’re in doubt, check with us.

 

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