Our accountant were quite amazed that the IRD didnt com down hard on us because

Our accountant were quite amazed that the ird didnt

This preview shows page 140 - 142 out of 241 pages.

on you. Our accountant were quite amazed that the IRD didn’t come down hard on us because the IRD made all our penalties nil and they accepted all our terms of how we were going to pay the debt off and basically they were good to us.” (P1) Business experts who dealt with Pacific operators observed that a significant number of Pacific SME operators did not have any record keeping system or would delay the record keeping process until it was demanded by the IRD or other stakeholders. Their poor record keeping system resulted in high tax compliance costs: “They don’t do it. I came across this woman who has been in business and goodness knows what she has been doing. For 18 months, the records arrived in a shoebox and all of a sudden she want to apply for a financial grant and she can’t do that unless she has the financial record and a business plan. We get bags and boxes of receipts and invoices for 18 months and we had to ask for her bank statements as some of them were missing. We were given receipts and cheque books and nothing was written on the cheque butts and then we don’t know what the payment is for. There are days when I just get so frustrated because there is no record and she has no apparent understanding of what she is doing. I don’t know how she can keep the business running for 18 months and have nothing, absolutely nothing in place.” (BE10) The main issues with the Maori and Pacific SME operators from their audit accounts point to: their record keeping weaknesses; poor cash planning; poor financial literacy
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127 and low tax knowledge. These weaknesses were more evident with these groups largely because of their lack of interest towards systematic and disciplined record keeping and their cultural predispositions towards risk, time, money, and work, as discussed extensively in Chapter 6. Their audit experiences proved the importance of having good record keeping systems and cash planning and that IRD auditors were sympathetic to the needs of SMEs. In contrast, the European operators encountered different tax audits as discussed in the next subsection. 7.4.4 Audit experiences and financial literacy of the European operators The European operators who were audited in this sample had a range of positive to negative experiences with tax auditors, and they generally viewed the audit process as a business intrusion and a form of IRD checking on them, due to their low power distance values: “I have been audited probably two or three times before for GST and there was no problem. The audit is to be expected from the IRD people. The IRD officer that dealt with us had no sense of humour or any personality at all. He was a bit inflexible as he wanted to check for every single invoice even though the invoice was stated in the supplier’s monthly statement. He was not willing to stretch anything at all and he didn’t find anything. He came to the store and stayed there for the whole day.” (E5) “Two of the top IRD auditors in Auckland are fairly butch women. My
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  • Fall '16
  • tax compliance, SME Operators

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