Kiwifruit tax scam busted by IRD

By Michele McPherson


A Tauranga kiwifruit labour contractor has been jailed for a year for tax evasion offences totalling about $55,000.

Adrian Ace, 41, of Te Puna whose company Pride Contracting provided labour for the kiwifruit industry, was sentenced in Tauranga District Court on Wednesday.

Ace had earlier been found guilty of 28 charges of failing to account for PAYE and three charges of evading GST.

Court documents reveal despite the business being registered for income tax, GST and PAYE in April 2004 no PAYE payments were made between July 2006 and December 2007. The company stopped filing GST returns after March 2007.

Ace also failed to file income tax returns for period March 31, 2008 to March 31, 2009.<inline type="recurring-inline" id="1003" align="outside" enforce-sites="no" />

As a result of not filing returns or accounting for PAYE and GST the total loss to Inland Revenue was $273,847.53 including interest and penalties.

However after IRD deducted $133,506 worth of withholding credits from the core tax owed, the total owing was $55,000.

An audit letter was sent to him in April 2008 and when he was interviewed by an IRD investigator on January 28, 2009, Ace admitted disregarding the statements. His company was put into liquidation the same day.

IRD assurance investigations manager Jonathan Matthews said the company either filed its returns late or had bank payments dishonoured.

Mr Matthews said that in August 2005, the IRD entered into a repayment agreement with Ace to try to help him repay his debts which had reachedslightly more than $21,000.

Ace made six repayments of $1800 but stopped the payments in March 2006.

Mr Matthews said Ace admitted that he used the PAYE deducted from his workers to pay for rent and petrol and the GST that was collected was used to pay wages.

"Mr Ace also used his business bank account for personal expenditure including rent, groceries and recreational activities," Mr Matthews said.

He said Ace had claimed that he was advised that the 15 per cent withholding tax that was deducted by the orchardists who employed his services covered his tax liabilities.

"This advice was incorrect as it was his responsibility to know what his obligations were and to have met them," Mr Matthews said.

IRD said tax evasion schemes had been operating in the agricultural and horticultural sector in the Bay of Plenty for some time.

Other kiwifruit contractors jailed for tax evasion

August 2011: Kiwifruit contractor John David Pongi, 46, of Katikati was jailed for 2 years for almost $244,000 in evaded taxes.

September 2010: Bay of Plenty kiwifruit contractor Abdul Zaheed, 35, was jailed for 19 months after tax evasion offences totalling more than $166,000.

September 2010: Former orchardist Mohammed Rashidul Amin, 44, was jailed for 3 years for his part a tax evasion scheme to deprive IRD of up to $200,000.

June 2010: Pyes Pa kiwifruit labour contractor Harbhajan Singh Kahlon, 53, was jailed for 4 years after creating an elaborate tax evasion scam, involving more than $700,000 of taxes.

February 2008: Western Bay orchard worker Muhammad Hussain was jailed for 2 years, 9 months for his part in a $15 million horticultural tax scam.

June 2008: Tauranga man Sandeep Sood was jailed for 3 years, 3 months for more than $1.5 million of tax fraud.

November 2007: Western Bay orchard worker Mohammed Wasmin, 39, the kingpin behind the $15 million tax scam, already behind bars for bigamy, was jailed for 5 years, 9 months.

May 2006: Te Puke horticultural contractor Balwingh Singh was jailed for 3 years, 2 months for more than $650,000 of tax fraud.

- BAY OF PLENTY TIMES

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