First Conviction in New Zealand for Possession of Tax Evasion Software: What Business Owners Need to Know
In a landmark case that sets a new precedent for digital tax compliance in New Zealand, an Auckland man has become the first person in the country to be convicted and sentenced for aiding and abetting his company’s possession of electronic tools used to evade taxes.
Gurwinder Singh, owner of the pizza outlet Just Pizza in Waiuku, was sentenced to seven months of home detention by the Manukau District Court on July 15, following an extensive Inland Revenue (IR) investigation. Singh’s conviction is the first of its kind since new laws came into effect in April 2022, criminalising the acquisition or possession of Electronic Sales Suppression Tools (ESST).
What Are Electronic Sales Suppression Tools (ESST)?
ESST are software applications or devices designed to manipulate point-of-sale (POS) data. These tools work by deleting or altering transaction records to underreport income, which in turn reduces GST and income tax obligations. In effect, ESST enables businesses to conceal revenue and evade taxes without leaving a clear paper trail.
According to Inland Revenue, ESST serves no legitimate business purpose other than to facilitate tax evasion or money laundering, and their use undermines the integrity of the tax system both in New Zealand and globally.
The Findings of the IRD Investigation
The investigation into Singh's activities revealed a disturbing pattern of deliberate deception:
Singh admitted during interviews that he was concealing income from his tax agent to reduce his tax liability.
Former employees confirmed the business had four staff members, while PAYE returns submitted to IRD listed only two.
Financial records and bank statements supported these claims and highlighted further inconsistencies in GST and income reporting.
The discrepancies uncovered were substantial:
GST underreported: $78,777.09
Income tax shortfall: Nearly $100,000
PAYE unpaid: $21,337
Total tax evasion: Over $198,500
The court noted that the offending was "planned, calculated, and required ongoing financial manipulation." Despite Singh requesting a delay to serve his sentence in order to attend family funerals overseas, the court proceeded with a deferred start date but upheld the seriousness of the charge.
A Wake-Up Call for Business Owners
This case sends a strong and clear message to business owners across New Zealand: the IRD is watching, and enforcement is real. With advanced data-matching technology and more aggressive audit tactics, it is becoming increasingly difficult to hide behind accounting tricks or deceptive software.
If you’re using outdated POS systems or third-party tools, it’s essential to ensure they comply with New Zealand’s tax laws. Unintentional non-compliance is no longer a defence, and deliberate fraud will be met with criminal prosecution.
How We Can Help
If you have concerns about your accounting software, GST filing, PAYE returns, or the legitimacy of your financial reporting tools, now is the time to act. At [Your Firm Name], we provide clear, compliant, and proactive tax advice that helps you avoid costly mistakes — and serious legal consequences.
Need a second opinion on your tax compliance? Reach out to our team today.