Jailed: Company director diverted $1.6 million in tax payments for personal use

A Christchurch business director has been sentenced to three years in prison after withholding over $1.6 million in employee tax payments, in a case described as the “worst of its kind” in two decades.

Melanie Jill Tatana, also known as Melanie Jill Smith, was found guilty of systematically diverting tax funds from her company, Asia Pacific Group Ltd (APG), into personal accounts rather than remitting them to New Zealand’s Inland Revenue.

Tatana’s company, APG, was required to withhold PAYE (pay-as-you-earn) taxes from the wages of its approximately 60 employees and transfer these funds to Inland Revenue. However, between August 2019 and September 2022, APG failed to remit PAYE funds on 63 occasions, accumulating a total shortfall of $1,602,864.17.

Judge Michael Crosbie underscored that Tatana’s actions were deliberate, constituting a “wilful diversion of funds” rather than an outcome of financial insolvency.

Following an investigation by Inland Revenue, Tatana was charged with 63 counts of aiding and abetting APG to retain PAYE deductions from workers’ wages without forwarding them to the tax authorities.

‘Significant’ employee fraud

An examination of APG’s financial records revealed that Tatana had diverted over $800,000 into her personal bank account, with “further significant” funds funneled into an account also accessible by her daughter.

Records indicate that the diverted money was spent on personal expenses, underscoring the misuse of company resources for private gain, said Inland Revenue.

APG also received substantial government support during this period, including over $2.2 million in COVID-19 wage subsidies and $107,500 in resurgence support payments between April and May 2022, even as PAYE obligations went unmet.

Warnings by Inland Revenue

Inland Revenue had issued multiple warnings to Tatana regarding the unpaid PAYE contributions. By May 2021, APG was officially under investigation for failing to comply with its PAYE obligations, but the non-payment continued unabated.

The government agency emphasized Tatana’s lack of remorse and the need for a sentence that would deter similar actions by others.

“The belief that government departments can be seen as an easy target must be countered,” said a media release, noting the broader implications of such offenses on societal order.

The judge also commented that if others engaged in similar tax evasion practices, “We would be in a state of chaos.”