Sex workers get IRD help to cut taxes

By EUGENE BINGHAM

Tax collectors are trying new ways to get their hands on vice money fuelling the black economy.

After years of using hardline tactics, Inland Revenue has published a booklet to help sex workers meet their tax obligations and launched an education programme for gangs.

The booklet, "Private operators - a tax guide for self-employed sex workers", assures discretion and advises those in the industry how to reduce their tax bill by claiming expenses.

"The total cost of consumable items is an allowable deduction," says the booklet.

"These items include such things as condoms, lubricants, gels, oils, tissues, bubble bath and other similar items used when providing a service to a client.

"You can describe your occupation on any IRD forms as contractor, consultant, commission agent, hostess, receptionist, entertainer or any other similar description."

The booklet has been produced by the special audit unit, a team of IRD employees whose job it is to deal with the black economy.

As well as sex workers, they deal with gangs, drug-dealers, wildlife smugglers and others involved in organised crime.

A bill decriminalising prostitution was debated in the House this week and is expected to be voted on again next month.

Bruce Thompson, the IRD's general manager of service delivery, said the unit's education programmes appeared to be working because there had been increased compliance.

In particular, many sex workers and drug dealers were now in the habit of paying taxes, he said.

There are no statistics or official estimates of income generated through illegal activities, but in the past five years, the unit has recovered about $15 million a year through audits.

The national co-ordinator of the New Zealand Prostitutes Collective, Catherine Healy, said there had been co-operation with the IRD to find out exactly what was expected of sex workers. It was still a complex area, fraught with difficulties.

Others had found themselves in difficulty, burdened with tax debts and having to work in situations that might not be ideal just to make enough money.

"People also worry about what information goes where [when they deal with IRD]."

Things would be made simpler if prostitution was legalised, she said.

While IRD also has an education programme with gangs, a spokeswoman said it had not produced any booklets for them.

Gangs the Herald contacted said they did not want to talk about their dealings with IRD.


Pros and cons

What sex workers can claim:

* Consumable items including condoms, lubricants and bubble bath.

* Work clothes including lingerie, costumes and stockings.

* Industry-specific medical expenses including HIV and STD tests. Pregnancy tests and cosmetic surgery may be deductible, depending on circumstances.

* If workers use a designated part of their home for business (such as a spare bedroom) a proportion of home expenses may be deductible.

What sex workers cannot claim:

* Gym fees.

* Drugs.

* Drug rehabilitation.

* Court fines.

* Childcare.

Source: IRD