Revenue Alert on the Horticulture sector

Inland Revenue (IR) is calling out a number of practices prevalent in the horticultural sector which it believes pose a significant risk to the integrity of the tax system.

The practices include workers being paid in cash, complex contracting arrangements being used to obscure what’s really going on, and obligations under the schedular payments rules not being met.

The department is so concerned that it has issued a Revenue Alert about the non-compliance.

Revenue Alerts are issued infrequently by the Commissioner of Inland Revenue (CIR) and provide information about a significant and/or emerging tax issues of concern. 

Because of the concern, IR is increasing its focus on growers, contractors and subcontractors and will investigate anything suspicious. 

Inland Revenue is aware of arrangements where false invoices are created and used to obscure the true nature of transactions and can result in the under-reporting of GST, PAYE and/or income tax obligations.

Where these sorts of arrangements are being used to evade tax, Inland Revenue will look to make or amend assessments. Prosecution is also an option. 

Inland Revenue is increasing its scrutiny of new applications for GST registration by entities in the horticultural sector. This includes companies that may have been set up for the sole purpose of issuing false invoices.

If an entity isn’t carrying on a taxable activity (or isn’t intending to carry on a taxable activity) its GST registration application will be declined.

Inland Revenue is also looking at non-compliance with schedular payment obligations and at the use of certificates of exemption and tailored tax rates by taxpayers in the sector.

IR is increasing action taken to pursue outstanding debt in the horticultural sector and will use the range of powers to collect this debt. 

Inland Revenue is also concerned about broader non-compliance with GST, PAYE and income tax obligations in relation to the supply of labour in the horticultural sector. 

If evidence of non-tax offending by a taxpayer in the sector is identified, Inland Revenue will consider whether information may be shared with other government regulators/enforcement agencies such as Police and the Labour Inspectorate/Ministry of Business, Innovation and Employment (MBIE).

In the year to June 30, 2026, Inland Revenue opened around 130 investigations into horticulture businesses, involving $7.2 million in discrepancies. 45 cases are still open.

Three people involved in the horticulture sector were sentenced to home detention during the year on tax evasion charges.

Notes: 

• The horticultural sector involves the growing of fruit crops and vegetables for export and domestic consumption. 

•  Key roles in this industry include growers who own or lease orchards and growing facilities (or management companies appointed by owners to operate the horticultural growing business), contractors that provide labour to growers relating to the cultivation of crops, and post-harvest facilities who receive and process goods for sale and export.