Te Papa faces audit as IRD probes sector

DAVE BURGESS
Last updated 05:00 25/06/2014

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National museum Te Papa is being audited by Inland Revenue, which is understood to be conducting a tax review of organisations in the culture and heritage sector.

The review of Te Papa's tax affairs - covering GST, PAYE, withholding tax and fringe benefit tax - started in May 2012 and is ongoing.

The museum confirmed that recently it had answered questions around fringe benefit tax.

Te Papa chairman Evan Williams said it was his understanding that the tax audit was "not Te Papa-specific. It is all of the entities in the culture and heritage sector".

He believed the IRD was "trying to get its hands around" the way tax issues were treated within the sector.

"This is an absolutely business as usual review by the IRD. We are not aware of any specific issues at all."

Deloitte New Zealand chief executive Thomas Pippos said at the start of a tax year IRD released a Compliance Focus document which highlights a certain tax or a specific taxpayer group to focus on. In the 2012/13 year, the public sector was one area of focus.

While GST was singled out in the 2014 Compliance Focus, the public sector was not, he said.

It could be that the audit of Te Papa is a "spill-over from the 2012/13 initiatives" as they may not have been completed within the year-long window.

The sorts of taxes being scrutinised at Te Papa were indirect taxes, Pippos said.

"With an organisation like Te Papa, which I suspect is a non-tax paying organisation, what they [IRD] are trying to do is ascertain or validate the tax filing positions in relation to indirect tax."

The fact that there was an audit should not be considered untoward, he said.

"You shouldn't draw a negative inference at all other than that they will be distracted somewhat, because having anybody audit them is not necessarily what you wish for for Christmas."

Inland Revenue senior media adviser Lorna Milton issued a one-line statement in reply to questions asked by The Dominion Post.

"Due to customer confidentiality we are unable to discuss individual cases or details of any compliance activities which may result in the identification of individuals."

The questions IRD refused to answer included whether there was a sector-wide audit and, if there was, what spiked their interest. It was not asked to identify individuals.

Last week Te Papa revealed it would make an estimated $8 million loss for the year ending June, nearly double its $4.4m forecast, after a wretched start to the financial year.

Two exhibitions - Aztecs: Conquest & Glory and Colour & Light: Impressionism from France & America - both heavily under-delivered, and the museum was forced into aggressive cost-cutting which led to speculation it was in serious financial trouble.

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The extent of financial strife became apparent to Te Papa's board in December when the museum was heading for a $12m loss, before the cost-cutting measures were introduced.

In April, chief executive Michael Houlihan was seconded for a year to the Ministry of Culture and Heritage as a special adviser on military heritage. He will not be returning to Te Papa.

Williams stressed that Houlihan had not been sacked and had "contributed enormously to Te Papa's vision and the 10-year plan we've got under way".

- Stuff

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