Inland Revenue increases focus on horticulture
Inland Revenue has issued an alert outlining concerns about tax compliance in the horticultural sector.
Its focus includes growers, contractors and subcontractors involved in supplying labour for orchards, vineyards and other horticultural operations.
Inland Revenue has highlighted:
Incorrect withholding tax deductions
Contracting arrangements that obscure who completed the work
False invoices and cash wages that are not properly accounted for
This is more than a general warning. Inland Revenue has confirmed it is increasing its focus on the sector, scrutinising new GST registrations and taking stronger action to collect outstanding debt.
In the year to 30 June 2026, it opened around 130 investigations into horticultural businesses, involving $7.2 million in discrepancies.
What should horticultural businesses check?
Even if you are confident your business is operating correctly, now is a good time to review your labour and contracting arrangements.
In particular, check that:
You understand who is completing the work and who is issuing the invoice.
Your invoices accurately reflect the work performed.
Contractor payments are being treated correctly for withholding tax.
You hold a completed IR330C for each relevant contractor, unless they have provided a valid certificate of exemption.
Any certificates of exemption or tailored tax rate certificates are current. These are issued for a tax year ending 31 March and must be renewed each year.
GST, PAYE and income tax obligations are being met across your business.
You retain the appropriate supporting records for at least seven tax years.
Payments for cultivation contract work will generally be subject to the schedular payment rules, including payments made to contracting companies. Unless the contractor provides a valid certificate of exemption or a tailored tax rate certificate showing a 0% rate, the payer will usually need to deduct withholding tax.
The standard withholding rate for cultivation contract work is generally 15% of the payment excluding GST. If the contractor has not supplied their name and IRD number, a 45% non-notification rate may apply.
Look beyond the paperwork
This review should not be limited to checking whether an invoice is on file.
Consider whether the arrangement makes commercial sense and whether the business named on the invoice is genuinely providing the people and services being charged for.
If your contractors use subcontractors, it is also worth understanding how those arrangements work. Clear agreements, reliable records and appropriate checks can help reduce the risk of your business becoming involved in a non-compliant arrangement.
Paying someone in cash is not automatically a problem. The concern arises when payments and income are not fully recorded, or when GST, PAYE and withholding obligations are not met.
Address any concerns early
Where Inland Revenue identifies deliberate tax evasion, it may amend assessments, impose penalties or prosecute.
If you are unsure whether the alert applies to your business, or identify an issue during your review, seek advice early. It may be possible to correct the position or make a voluntary disclosure before Inland Revenue begins an investigation.
Reviewing your arrangements now can help you understand where you stand, address any gaps and reduce the risk of an unexpected issue later.
If you would like help reviewing your contractor arrangements, withholding tax treatment or record-keeping, please reach out to your Campbell Tyson advisor. We’re happy to help.