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Retailer given 7½ months’ home detention for hiding $1m in cash sales

A Gisborne retailer who hid more than $1 million in cash sales from his accountant to avoid paying tax has been sentenced to seven-and-a-half months’ home detention.

Liangxing Luo, 46, who runs the Art Fun Wear chain of emporium-style stores in Gisborne, Dunedin and Invercargill, claimed he directed cash takings into his own bank accounts to avoid bank fees and forgot to transfer the money to business accounts. 

Over a four-year period Luo arranged for some of the cash sales from each store to be paid into his personal bank account or those of his family members, resulting in $421,429 in GST and income tax not being paid to Inland Revenue.

Inland Revenue Group Manager Investigations Patrick Goggin said Luo’s offending was inexcusable and his defence baseless.

“There is absolutely no possibility Mr Luo didn’t know that what he was doing was wrong. Pocketing cash sales and not letting his tax agent know was clearly a deliberate strategy to avoid paying tax,” Mr Goggin said.

While Mr Luo evaded his obligations, Inland Revenue was able to recover the unpaid tax and use of money interest through its powers and ability to have funds deducted from bank accounts, he said.

“New Zealanders should know that we will catch tax evaders and hold them to account for not paying their fair share of tax.”

“There is absolutely no possibility Mr Luo didn’t know that what he was doing was wrong. Pocketing cash sales and not letting his tax agent know was clearly a deliberate strategy to avoid paying tax,” Mr Goggin said.

While Mr Luo evaded his obligations, Inland Revenue was able to recover the unpaid tax and use of money interest through its powers and ability to have funds deducted from bank accounts, he said.

“New Zealanders should know that we will catch tax evaders and hold them to account for not paying their fair share of tax.”