An Inland Revenue Department crackdown on Chinese restaurants has shocked the Chinese hospitality industry, which says it is struggling to recover from the effects of the recession. In the run-up to Christmas at least 12 Auckland Chinese restaurants received surprise visits from IRD officers, who interviewed all staff. The investigation approach was “unprecedented”, said Auckland Chinese Food and Beverage Business Association president Tony Cho. Restaurants that reported profits lower than the industry average were in the IRD’s sights, said chartered accountant and former IRD senior investigator Wing Wong. “It appears that restaurants with a gross profit ratio of 50 per cent or less are being targeted.” Medium-sized eateries had so far been in the gun but he expected larger restaurants would also be investigated. “It is unclear as to whether the smaller food outlets such as takeaways would be similarly targeted as the IRD has limited resources.”
The IRD’s activities have unnerved the Asian business community. “This is a significant departure from the usual IRD approach of first notifying the taxpayer to be investigated that they have been selected for a tax investigation,” he said. In at least one of the surprise visits, IRD staff were reportedly also accompanied by immigration officials and police officers. It is understood the taxman’s key areas of concern are cash wages paid to restaurant staff, particularly part-timers, and staff meals.
A Chinese restaurant industry insider said that paying wages under the table was a common practice. The restaurants benefited by not paying PAYE and GST but it was also done because some staff were receiving Work and Income benefits. A few owners told the Herald on Sunday they would be happy to pay PAYE on all wages but some workers demanded cash and they would struggle to recruit the necessary staff otherwise. However, they also said if they met all their tax obligations their businesses would not be viable.
Sounds like Sherril George of Waitara may well have a case. David Farrar needs to issue an apology for his intemperate and unjustified allegations of racism. Or else write an equally critical post targeting the IRD. No point in asking all the ignorant and frantic Kiwiblog thugs who jumped on the bandwagon for a retraction as well. As graceless as pigs in a muddy sty, they would have as much idea about an apology as they would have about how the Asians (say they) run their businesses.
All that desperate vicious hate, and none of it justified. Just lucky that the days of lynching people from trees are long gone.