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An Auckland man has become the first person in New Zealand to be convicted and sentenced for using electronic equipment to underreport sales and dodge tax.
Gurwinder Singh was sentenced in the Manukau District Court this week to seven months' home detention on tax evasion charges and for possessing electronic sales suppression tools (ESST) to evade the assessment and payment of tax.
IRD said Singh, who runs a pizza outlet in Waiuku, admitted he was hiding income from his tax agent so that he did not have to pay so much tax.
"Singh's offending was planned, calculated and required ongoing financial manipulation," it said in a statement.
Singh also claimed only two staff were employed when there were four.
The total amount of tax avoided was around $200,000, composed of approximately $79,000 in GST, $100,000 in income tax, and $21,000 in PAYE.
Sales and tax zappers
ESST technology, also known as "phantomware" and "zappers," connects to point of sale systems to underreport sales and reduce taxable income.
The IRD has previously warned of a crackdown and harsh penalties for possessing ESST technology, because it posed a threat to the integrity of the tax system.
Buying, possessing, and using ESST technology was made a criminal offence in 2022, with fines ranging between $5,000 for buying and possession, to $250,000 for using it.
IRD has received an extra $64 million in this year's budget to boost tax collection and drive tax compliance.
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