16 October 2024An Auckland man who failed to declare income from building work has been sentenced to a year’s home detention.

Kahdim Ali was sentenced in the Manukau District Court on October 4 after pleading guilty to 35 charges including evading or attempting to evade the assessment or payment of personal income tax, GST as well as income tax and GST of his company.

Ali worked in the construction sector for more than a decade.

Inland Revenue began investigating his tax affairs after it became known in a related investigation that he was receiving large sums of cash from clients in the building industry but wasn’t declaring that money in tax returns. The investigation was extended to include the tax affairs of his company A1 Projects Limited (A1).

Ali used a tax agent for all his personal and business tax returns and in 2009, 2010 and 2013 declared nil income. Income declared for 2011 and 2012 was only PAYE based salary and in 2014 and 2015 the returns show only shareholder salary received from A1.

Ali claimed he provided his tax agent with the bank account to include the income in tax returns and also claimed he had provided the tax agent with all supplier invoices. Both claims turned out to be false.

He only provided his agent with A1’s bank account statements for the completion of all tax returns, when in fact the majority of income was being deposited into a personal bank account. This resulted in false income tax and GST returns being filed for A1, as well as false personal income tax returns.

He also did not file any personal GST returns despite collecting a substantial amount of GST through his building contracts.

The total taxes Kahdim Ali evaded was: 
• Personal income tax = $212,581.70 
• Personal GST = $78,404.23 
• A1’s income tax = $30,022.95 
• A1’s GST = $27,538.08

TOTAL = $348,546.96

In 2019 Ali was adjudged bankrupt and in 2023 the Official Assignee paid Inland Revenue $210,000 of the debt. After accounting for some minor amounts received in 2017, the remaining unrecovered tax shortfall was $135,073, which Ali paid in full a week before sentencing.

As well as home detention, Ali was also sentenced to 200 hours community work.

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