The Inland Revenue Department (IRD) implemented their new system in April.
For taxpayers who were previously under the personal tax summary legislation, the IRD will now automatically complete your taxation requirements and will be issuing assessments from May 21 to early July showing either a refund, or tax owing by you. It is important when you receive this assessment of your income that you check it carefully as your sources of income may have changed and you may have other forms of income to declare or expenses to claim. You have 45 days to reply to the IRD with any adjustments.
Note any income from a financial institution (interest income) or a Kiwisaver fund is being reported directly to the IRD, provided that the financial institution has your IRD number.
For taxpayers who normally file an IR3 or IR3A, the new system has some teething problems which accountants are advising the IRD about as we note them. The IRD is fixing these as quickly as possible.
If you receive a letter from the IRD showing that you owe money when you are sure that your tax is up to date, please talk to your accounting advisors or the IRD directly as there could be an error. I have noted that in some cases provisional tax liability has been doubled up by the IRD and, until it is fixed, a phonecall to the IRD is needed to remedy the situation.
Pay day filing
Pay day filing basically means that the employer advises the IRD of your income and tax paid at the same time as they pay you each pay period, meaning the information will be more up to date than previously.
This new process seems to be progressing well. The IRD invested a lot of time prior to the change to help people get set up for the new system and are also very helpful with any queries that may arise.
If you get behind on your tax payments, it is important to keep in touch with the IRD. Instalment arrangements are easier to set up now, and limit some of the penalties that may be payable otherwise. If you are paying by instalments and have trouble keeping up with the payments, call the IRD and discuss it with them. They can potentially look at a better arrangement to fit your budget.