Labour contractor jailed for tax evasion

File photo / NZ Herald

A Bay of Plenty labour contractor was jailed today for 19 months after admitting evading tax of more than $166,000.

Abdul Zaheed, who appeared for sentence in Tauranga District Court on 15 charges, was also ordered to pay reparation of $20,000.

Jonathan Matthews, Inland Revenue's investigations assurance manager, said Zaheed's actions were deliberate and calculated.

"He set up a company and then failed to meet the tax obligations for substantial income," he said.

"He wasn't only cheating taxpayers, he was getting an unfair advantage over other businesses in the industry that played by the rules.

"Not paying the PAYE also meant Zaheed's workers could possibly get additional benefits they weren't entitled to, or not meet responsibilities like child support or making student loan repayments."

Zaheed had been involved in supplying labour for orchardists and packhouses since 2001, and set up a new labour contracting business, Multani Horticulture Ltd, in September 2008.

The court was told the company registered for GST and income tax and was required to file GST returns every two months and PAYE returns monthly and to pay the tax assessed.

However, by May 2009 it had failed to file any GST returns and had only made two PAYE payments totalling $3305.

Inland Revenue got copies of the company's bank statements which indicated it earned contracting income for GST purposes of at least $1,212,328 between October 2008 and the end of March 2009.

Zaheed subsequently agreed to file GST returns which showed unpaid tax owing of $134,547. Monthly returns filed showed PAYE of $199,000 was owed.

GST and PAYE returns were also not filed from April 2009 to the end of July that year. During that time another $245,000 was earned by Zaheed's company, resulting in tax owed of nearly $74,000. Inland Revenue received just over $200,000 of withholding tax credits for the company and around $40,000 from deduction orders placed on company bank accounts which was credited off the debt.

- NZPA