Connecting IRD and Accountancy

TMNZ’s goal is to help connect IRD and accountants for the benefit of taxpayers everywhere. Our interviews with IRD at our 6 roadshow events never ran short on questions but always did on time. Here are all the questions accountants asked and each answered by IRD.

Use the sub menu here and the sticky menu to navigate the page to each section. Systems | Payroll | AIM | Policy | Communication | Tax Pooling | Process

Systems

On GST it is still many clicks to simply view the return. Can this be fixed? Will IRD be reviewing how far back we can access GST information online?
Based on prior feedback we have made changes to make it easier to view GST information without needing to navigate to the return itself. For example we have provided the GST return summary report to allow you to view up to two years of GST return data in one place without needing to click into individual returns. We’ll continue to refine and improve the system as we progress through the next releases. We are open to suggestions on how you see that this could be improved. When we converted GST into our new system we made a conscious decision to limit the amount of back year data we were going to convert. As we operate in the new system for longer more back years will become available, but we cannot go back any further for periods prior to our conversion date.

With GST data in new system you can only go back to May 16 (I think) when all tax types in new system will be able to access historical data back few years?
When we transferred GST from our old system into the new one, we converted the previous three years’ worth of data. This is the furthest back we can display in myIR. If you require earlier data, this can be obtained via the contact centre or secure mail.

When will income tax be moving to the new platform?
We intend to move income tax to our new online system in April 2019. Users will notice that myIR looks different, contains more information, and has better functionality – such as the ability to file, pay and amend returns online.

When will Loss Notices and Excess Imputation Credit Notices be available via efile (online) rather than in paper form?
It is our intention that once income tax is available in our new online system in April 2019, losses carried forward and excess imputation credits will be available online. Tax agents will be able to access the figures from within a client’s income profile. They will also be available on the client list report for tax agents.

What is IRD trying to do about tax payments that are in the IRD system in suspense but not showing in customers’ accounts?
We aren’t aware of an issue with suspended payments. In most cases payments are held in suspense because we do not have sufficient information to process them automatically and they need to be assessed manually. Some reasons that payments can be suspended are: incorrect IRD number used, not registered for tax type, failure to put any information in, wrong period used or wrong year used. We do have an agreed 10 day service level on the payments that suspend and we are generally within this timeframe. If payments were visible to the customers they could potentially be asking for refunds that are not actually theirs hence why suspended payments do not show until the information has been corrected. Can you please provide us with actual examples if you believe that the problem has been created by an event not covered above?

Will IRD be introducing any checks for when clients make payments into the wrong period leaving a debit in one period and a credit in the other?
Once all tax types are in the new system (April 2019), we will be better able to identify where credits exist in a period and automatically allocate to debits. The new system evaluates all credits (including payments) nightly. We first evaluate the period the payment was made to, with some assumptions based on customer behaviour. If we find that the period shouldn’t have the credit, we will automatically transfer it to debt amounts.

Why is your computer system automatically assigning client tax refunds to other tax liabilities that are not yet payable/overdue?
This is generally done to simplify compliance for clients, and to avoid issuing a refund then having to send a bill (with the risk of penalties and interest if payment is late). This is standard practise which has been in force for some time.

Have experienced issues with transfer request (done via secure mail) from GST to income tax not being processed as the refund is released before the transfer?
While we are working between two systems transfer requests are completed by us manually. This can lead to delays in secure mail requests for transfers to be completed. Please encourage your staff or customers who are filing online to complete the credit transfer request, which is possible during online filing. This can then be actioned immediately.

Under the new system, no information on funds transferred in and out are showing, making life difficult for us and taxpayers
This will improve once all tax types are in the new system. We are currently limited as to the amount of information we can pass between the two systems for transfers.

When INC & PAYE move over to the new MyIR system next year will there be a way to bulk upload all our remaining clients, like we did when GST first moved over?
When GST was introduced agents needed to have all clients in their workspace in order to access their information. In order to make it easier the first time we provided a bulk upload spread sheet. In the following releases we have made it easier to add and remove clients from your workspace and it’s now possible for you to access your linked clients’ information without adding them to your workspace. We understand some of you just need to be able to quickly access a client’s details if they call on the phone, or you might have overall responsibility for monitoring and reviewing information. We have listened to your feedback and developed some reports that will make this possible without having to add the client to your workspace to view the information. These are the client list report and redirected client mail report, and all client transaction reports. The client list report provides information about all clients linked to your agency and can be generated at any time. This will include what accounts you are linked for, debt balances, instalment arrangements, outstanding returns as well as GST filing frequency, account basis etc. The redirected client mail report shows all client mail that you’ve chosen to have redirected to your tax agency can be accessed in this report, a month at a time. We’ve also developed a report similar to ‘Look at account information’, in which you can enter a client’s IRD number and select an account (tax type) and what time period to run it for. This report is available across all accounts, including those still in our old system. It can be exported as a spread sheet and saved in your own practise management system.

Is new IR system going to have the function of sending bulk L letters?
The ability to request L letters and D List will be available through MyIR after release 3. This will be limited to 20 requests at a time as these tools are not designed to be used for bulk requests.

How’s IRD going to ensure an error-free transition when INC & PAYE move to my-IR next year? The system is still full of issues in spite of assurances last year.
We realise that the changes have caused frustration for tax agents, particularly after Stage 1 going live in February 2017. Since then we have been working more closely with tax agents and their professional bodies to improve myIR services and validate our design thinking, for example seconding several tax agents to advise us. We are committed to continuing this engagement. As discussed at the workshop the sheer scale of the transformation means that each release will uncover new issues that will need to be resolved. We need your help to identify issues quickly so that we can fix and minimise any potential impact on you and our respective customers.

When will the IRD be able to combine the two servers (new and old) into one system?
Release 3 in April 2019 will see the majority of tax products operating from a single system, as we will move income tax and Working for Families Tax Credits across to the new system. Other products, like Student Loans, KiwiSaver and Child Support, will be moved across to the system in 2020 and 2021.

Will the new environment pick up money laundering activities easier and faster? How so?
Yes, the provision of modern systems with improved analytical capability as part of Inland Revenue’s transformation programme will enhance the sharing of information with anti-money laundering supervisors and the Police Financial Intelligence Unit.

Why can’t IR6’s be filed online via the IRD website like the other Inc tax returns eg IR4’s/IR3’s can? Will that change when Inc Tax goes into the new system?
Once income tax has been moved to our new online system, it will be possible to file returns such as the IR6 online.

Why is it so difficult to log on for GST return preparation on weekends given that you have a new and much more powerful computer?
We apologise for any difficulties you may have had accessing myIR. We’ve been working hard with vendors and internal teams to fix these issues. As far as we know weekends do not create any special difficulties logging on.

There are times where the ‘business’ section crashes for days. Is the IRD aware of the IT difficulties when it comes to the new system?
We’ve never had the system unavailable for days, unless it was for our cutover weekends which were planned and well-advertised. This said we do acknowledge there have been intermittent problems accessing our systems recently. We apologise for this, and are working hard with our vendors and our internal teams to address it on several fronts including, more regular improvements being made and a programme of regular remedial action which is now underway.
For some context the following stats: in one week in June alone we saw more than 714,000 logins to MyIR, with 98.7% logging in within our target of 6 seconds; and 270,000 transactions were completed within MyIR, with 99.9% within 3 seconds.

Why does the system send out emails that refer to letters or returns due with no taxpayer reference numbers, given that privacy needs to be maintained?
Due to privacy concerns we restricted the amount of identifying information available in emails. We have been working to improve the ability for tax agents to identify which client the email notification refers to and in some cases will provide the IRD number or MyIR user id. We are still working to improve the notifications and correspondence tax agents receive and have a team focusing on this.

Given that IR is planning to collect a lot more new data, are they planning on also releasing more back for public consumption?
We respect taxpayers’ privacy and keep their information confidential unless we are lawfully required or allowed to disclose it. We only use and disclose personal information in connection with our lawful functions and activities of administering the tax system, and in accordance with relevant legislation, including the Tax Administration Act 1994, and the Privacy Act.

IR is collecting more and more taxpayer data. What does it plan to do with this? I’ve had instances where IRD is contacting my clients directly. Is this a new strategy for the department?
With more data, we are able to create a simpler, more intelligent tax system. For example, with the extra data that we are getting through payday filing, we are able to more accurately calculate individuals’ and families’ tax obligations and entitlements. Sometimes we will contact customers directly about their tax affairs. This is part of our business-as-usual processes, and is not a new strategy. We remain fully committed to working closely with tax agents, bookkeepers and other intermediaries. We recognise the value they bring to their customers, and their contribution in ensuring compliance with our tax system.

With increased reliance on automation and a decrease in frontline staff, how will IRD handle errors created by the system.
Increased automation will reduce the need for staff to spend time on many manual tasks they currently need to complete – freeing them up to work on exception cases the system cannot handle.

Are there any plans to include a running balance in the new tax system? Currently GST and FBT do not have running balances.
There are no plans to introduce this functionality in the new tax system.

Why do you take the system down at some critical times? Why can’t you schedule for lower traffic times?
Scheduled outages are typically scheduled in low traffic times. That being said, we try to avoid full service outages at any time, and most changes can be made without an outage at all. Regardless if the outage is due to a fix or a change (be it a project or operational change), our approach is to minimise the impact to customers, both in terms of the duration and also the timing of any service outage.

Does IRD have plans to incorporate robotic process automation into the tax system?
We don’t intend to right now, we are focusing on Business intelligence which is all about informing/enhancing humans to make better decisions more efficiently so we’ll be able to spot areas of concern more easily and invest time and effort in a more targeted way to ensure we keep collecting the taxes to run NZ.

Why does the new system still crash frequently?
Unscheduled outages to the new system are infrequent. That being said, please note that managing major changes can be difficult. A large transformation project – like what Inland Revenue is currently going through – creates additional pressure and stresses on an environment than it used to under business-as-usual operations. Where we do experience an unscheduled outage or reduction in online service capability, we always move to fully resolve it as quickly as possible.

Will it be possible to view multiple pages of the same client on the same browser in the new system?
For security reasons, it will not be possible to view multiple pages of the same client.

The facility to make transfers between various tax types electronically is very limited at present. Is there any likelihood of this being facility being widened?
We are looking to introduce new financial transfer functionality from April 2019.

Under the new system emails are going out to clients reminding them for example gst is now due. Can these be turned off?
This is one of the features we are looking to introduce from April 2019.

Will the release of BT Income Tax be fully integrated with the practice tax software for statement information when it goes live, unlike the GST statements?
Tax agents with practice management software provided by either MYOB, Reckon, Wolters Kluwer or Xero will soon benefit from an updated transactional data feed that we’ll make available to them via their software provider. It’s called the Transactional Data Services, or TDS for short. Put simply, when new tax processes or products (such as income tax) are migrated across to our new system and become available on the new myIR platform, a data feed for that process will also be available via the TDS, which tax agents can then access via their software. Over time – and once all tax processes and products are available on our new platform – TDS will replace the Tax Agent Web Service (TAWS). Until then, both TDS and TAWS will work in tandem to ensure that tax agents get the transactional data they need to
manage their practice.

Why did IR take away the ability in FIRST to bulk-upload clients into your workspace?
When GST was introduced, agents needed to have all clients in their workspace in order to access their information. In order to make it easier the first time, we provided a bulk upload spread sheet. In the following releases, we have made it easier to add and remove clients from your workspace and it’s now possible for you to access your linked clients’ information without adding them to your workspace. We understand some of you just need to be able to quickly access a client’s details if they call on the phone, or you might have overall responsibility for monitoring and reviewing information. We have listened to your feedback and developed some reports that will make this possible without having to add the client to your workspace to view the information. These are the client list report and redirected client mail report, and all client transaction reports. The client list report provides information about all clients linked to your agency and can be generated at any time. This will include what accounts you are linked for, debt balances, instalment arrangements, outstanding returns as well as GST filing frequency, account basis etc. The redirected client mail report is a monthly report that shows all client mail that you’ve chosen to have redirected to your tax agency. We’ve also developed a report similar to ‘Look at account information’, in which you can enter a client’s IRD number and select an account (tax type) and what time period to run it for. This report is available across all accounts, including those still in our old system. It can be exported as a spread sheet and saved in your own practice management system.

Please make RWT income/deductions and company schedular income visible to agents (understanding that RWT is not absolute record, but helps client overlooking)
Once income tax is available in our new online system in April 2019, Resident Withholding Tax and non-individual scheduler income will be visible in myIR.

How likely RWT, ICA and DWT paid on interest and Dividend be shown in MyIR in the future?
From April 2019, tax agents will be able to access this information from within a client’s income profile in myIR. Customers will also be able to see this information themselves through myIR.

Is it possible to make WT patents to partnerships viewable on myIR
Once income tax is available in our new online system in April 2019, withholding tax payments to partnerships will be visible in myIR.

Payroll

When will PAYE be part of Business?
After 1 April 2019 – or once an employer opts in to payday filing voluntarily – a ‘Payroll returns’ account will be created in the ‘My business’ section of myIR.

Why is IRD going to pay filing?
Payday filing is an important change for a couple of reasons. Firstly, payday filing will help individuals and families. We will be receiving more timely information, which we will then use to more accurately calculate their tax and entitlements. Secondly, payday filing will – over time – better integrate the tax system into business processes. This will save businesses time, and relieve some of the compliance burden. It’s worth noting that much of the burden of payday filing is on software providers, who are updating existing products and creating new products to enable end-to-end data transfer.

Is there a contingency plan for if the new PAYE merge with ‘my business’ prevents online filing alongside the upcoming payday filing.
The new ‘Payroll returns’ account for payday filing (under ‘My business’) is already up and working for employers voluntarily payday filing, so we are confident employers will be able to meet their employer filing obligations from April 2019 when payday filing becomes mandatory. The ‘Payroll returns’ account also allows employers to file outstanding, and amend previously filed, Employer Monthly Schedules.

Have the software providers said they will be ready for pay day reporting?
A number of software providers are already providing software for payday filing. We are working closely with other providers, who we expect will be in a position to offer compatible products from April 2019.

Is IRD liaising with payroll software providers to have upgrades ready for April 2019?
Yes, we are working very closely with payroll software providers.

Please enable PAYE upload via a spreadsheet template to enable compatibility with many/all accounting softwares?
We are working closely with a number of payroll and accounting software providers in preparation for mandatory payday filing. One method of payday filing is the file upload method via myIR. This will allow employers to file by uploading output from their payday filing compatible software.

Will there be some dispensation for employers with say 5 employees or less from entering data weekly rather than monthly?
The law requires all employers to meet the deadlines for payday filing. We are working closely with software providers and employers to help make this happen. Remember that there may be different payday filing requirements for different types of taxpayers. For example, IR56 taxpayers have the option of continuing to file monthly as they currently do, but will have to do so within ten working days rather than on the 20th of the month as they do today. Similarly, schedular payments can be reported either on a payday basis or twice monthly.

Is IRD using Payday filing as a test case to assess whether they would introduce something similar with other tax types like GST?
Generally, moving to more regular payment and/or information reporting is an organisation strategic direction.

UK PAYE works on YTD income and PAYE paid ensuring that come the end of the year the correct amount of PAYE has been paid. Why do we not do that in New Zealand?
The current system is remarkably accurate without the additional complexity of the UK system. This coupled with improved operational services focus and better use of the information we get seems like the best way forward.

AIM

How popular has the AIM uptake been so far?
We are seeing new businesses elect into AIM as their provisional tax method of choice (1308 so far). We also expect more people to use AIM next year when they can elect to switch midyear and don’t need to make the decision before the first cut-off date (this is subject to legislation now before parliament).

Is AIM worth it as I have not found it suitable for any of my clients?
AIM is for businesses with turnover of less than $5 million a year. Businesses should consider AIM if:

  • their business is growing
  • they’re new to business
  • they have irregular or seasonal income
  • it’s hard to forecast their income accurately
  • they have accounting software or want to start using accounting software

AIM works through AIM-capable accounting software. It calculates a business’s provisional tax payments – all they have to do is keep their financial records up to date. As we build a greater understanding of what will make AIM more suitable to wider range of customers, we will explore how we can enhance AIM utilising our tax preparer network and software providers.

How much did AIM take to develop and was that worth the sugar?
The cost to develop AIM – particularly in the context of our broader transformation programme – was actually very modest. We were able to save a lot of internal costs by working directly with software providers to ensure their products were compliant. The functionality required for AIM also built on that which was already offered (for example, GST returns delivered by software). As we move towards real-time reporting for all tax types, developing AIM and offering it as a provisional tax option for businesses is an investment in the future.

The IRD must be disappointed at the take up of AIM. Why did you expect it to be any different?
We think that uptake of AIM will build steadily as more businesses adopt accounting software and embrace the opportunity to make their tax obligations simpler. Often people don’t rush into new services like this. The first year of filing GST through software attracted fewer than 2,000 customers – today it’s more than 85,000. We are seeing new businesses elect into AIM as their provisional tax method of choice (1308 so far). We also expect more people to use AIM next year when they can elect to switch mid-year and don’t need to make the decision before the first cut-off date (this is subject to legislation now before parliament).

In terms of AIM, near enough is close enough is rather vague. It’s like how long is a piece of string. What exactly is near enough in the eyes of the Revenue?
It is in a business’ best interests to be as accurate as possible with provisional tax during the year. This mitigates the chance of a large end-of-year tax bill. The legislation clearly states that there is no use of money interest applicable on underpayments of provisional tax with AIM. This isn’t open for interpretation, and demonstrates what we mean by close enough is good enough. We – Inland Revenue – care about a business’ end-of-year tax obligations. Provided a business meets their AIM provisional tax obligations during the year, they have no exposure to use of money interest.

Is AIM the aim of IRD for the future for all tax payers?
The concept of a rolling tax system is real and underpins the future design of the tax system. As more digital transactions are captured at source, this will result in change to the tax system as we know it today.

Policy

Work in the hidden economy continues at pace. Outside of construction and hospitality, what other sectors is IRD monitoring/about to target?
Inland Revenue has an active presence in a number of hidden economy areas, including the growth of online trading activity, self-employed contractors, various agricultural contracting activities, tourism, use of overseas issued credit cards as well as organised crime. These sit alongside the campaigns work we’ve recently undertaken in the large construction and hospitality sectors.

Work in the hidden economy continues at pace. Outside of construction and hospitality, what other sectors is IRD monitoring/about to target?
Inland Revenue has an active presence in a number of hidden economy areas, including the growth of online trading activity, self-employed contractors, various agricultural contracting activities, tourism, use of overseas issued credit cards as well as organised crime. These sit alongside the campaigns work we’ve recently undertaken in the large construction and hospitality sectors.

HMRC has rolled out the requirement for companies to have ‘iXBRL’ financial accounts, where tax return fields are linked to supporting accounts. Next for IRD?
Inland Revenue is working with the Ministry of Business, Innovation and Employment (MBIE) on electronic invoices. Please contact MBIE for further information.

How do you think cryptocurrency will affect IRD?
We are currently considering a range of issues related to cryptocurrency. It is worth noting that cryptocurrency is treated as property for tax purposes. There are no special tax rules for cryptocurrencies – ordinary tax rules apply. For more information, visit the IRD website.

Will IR propose to increase the tax bracket threshold?
Any change to the tax bracket threshold is a matter for Government.

Why were the proposals to ring-fence property losses released in April instead of waiting til the Tax Working Group report back re CGT?
We can’t comment on matters being considered by the Tax Working Group, which is an independent group brought together by the Government to consider the future of tax. But you can find out more about it at https://taxworkinggroup.govt.nz/

Communication

We are encouraged to use secure mail to ask questions instead of phoning IRD but the turn around on secure mail is so long. Will IRD shorten this time down
We work to provide a response within 10 days. Depending of the complexity of the enquiry and customer demand however, it may take a little longer. As an organisation, at times due to increased demand and customer needs, we do need to make prioritisation decisions on particular pieces of work. For example, to meet voice demand, we may need to slightly delay responding to other pieces of work, such as electronic correspondence.

Can you confirm is IRD using call centres to contact clients directly to persuade them to sign up to AIM tax payments?
Some customers were contacted directly as part of a national education campaign which also included webinars, seminars, advertising and social media. Customers were contacted to educate them about AIM and Payroll changes.

Messages included:

  • AIM – what it is, how it works, and how it may benefit your business
  • The way you file your EMS/EDF online may change in April 2018
  • Payroll filing changes are coming from 2019
  • eChannels are the future

Customers were encouraged to contact their tax agent to see if AIM would be suitable for them.

We are concerned and apologise where in some instances this has sent the wrong signals to both customers and agents, and created confusion. We are currently reviewing our future approach to ensure that we can respectively achieve the outcomes that we all desire.

The Department’s last 2 years of transformation has damaged agency relationships. Does the department understand that and what will it do to make improvements?
We realise that the changes have caused frustration for tax agents, particularly after Stage 1 going live in February 2017. Since then we have been working more closely with tax agents and their professional bodies to improve MyIR services and validate our design thinking, for example seconding several tax agents to advise us. Inland Revenue is committed to continuing this engagement. As discussed at the workshop the sheer scale of the transformation means that each release will uncover new issues that will need to be resolved. We need your help to identify issues quickly so that we can fix and minimise any potential impact on you and our respective customers.

Given that the agent line is so often overloaded, are there any plans to increase the efficiency of the Secure Mail system (in terms of timeframe of response)?
We have commenced planning for next year’s peak with the objective of improving our overall service in this area. We are constantly looking to improve our existing and new digital channels and at the same time looking at what else we may need to provide to ensure the right quality of service.

There has been a noticeable move away from informal engagements with tax agents. Do you see this as harmful for ensuring taxpayers get things right.
We remain fully committed to working closely with tax agents, bookkeepers and other intermediaries. We recognise the value they bring to their customers, and their contribution in ensuring compliance with our tax system. We still host local liaison meetings in may sites. If your site doesn’t have them and you can pull a group together or your professional body is hosting one, let your local account manager know and they will be more than happy to attend and provide updates.

Why are IRD in future setting up a NEW separate channel to cater for tax agents daily needs, as Chris said when it already exists with AAMs and agents hotline?
We are constantly looking to improve our existing channels and at the same time looking at what else we may need to provide to ensure the right quality of service.

What concerns have been raised about reduction experience & knowledge at the IRD over time?
There have been concerns raised about this. Changes to our own organisation are an integral part of our transformation programme. Over time, we’ll be shifting our whole organisation, including our back-office services like payroll and HR, into a new operating model. Earlier this year we saw the first shift, being our frontline teams and Intelligence/Analytics areas. This impacted around 3000 of our 5500 people. We’re rolling out new tools and training to support our people through these changes. Specifically, how you might see the first wave of our changes impacting you is that we have deliberately focused our teams around one or more customer groups covering Individuals, Small to Medium Enterprises, Large Enterprises and Families so we can better design, manage and champion the customer experience we want to provide to you. We are committed as part of this transformation to maintain the tax technical expertise we require to administer the NZ tax System.

Calling IRD on the agent line is increasingly time consuming. Are IRD aware of their overloaded system and will the proposed reduction in staff be on this line?
We do closely monitor our service levels, and apologise for recent issues with waiting times, and any frustrations felt by agents. Sometimes the volumes of calls are simply too high to handle promptly. For example, in one week in June we answered 79,950 calls but still couldn’t keep up with demand, so not all calls were answered, and we had long wait times. This situation is frustrating for our staff, who want to provide the best possible service for customers. We have commenced planning for next year’s peak with the objective of improving our overall service in this area. We are constantly looking to improve our existing channels and at the same time looking at what else we may need to provide to ensure the right quality of service.

IR seems intent on duplicating email and paper correspondence. We have had an influx of paper assessments or return forms arrive that were never previously requested?
Tax Agents should no longer be receiving redirected client mail by paper where they also receive them in MyIR. We have recently become aware of an issue where returns are being incorrectly sent by paper when they are normally filed electronically. Our teams have investigated this issue and believe it has been resolved. If you are still experiencing this issue for tax types in the new MyIR please send examples to your Account Manager and we can investigate.

Given the issues you’ve experienced, do you accept that it was perhaps a mistake to carry out a staff restructure at the same time as implementing a new system?
Changes to our own organisation are an integral part of our transformation programme. Over time, we’ll be shifting our whole organisation, including our back-office services like payroll and HR, into a new operating model. Earlier this year we saw the first shift, being our frontline teams and Intelligence/Analytics areas. This impacted around 3000 of our 5500 people. We’re rolling out new tools and training to support our people through these changes.

Are there likely to be less waiting times on the agent phone lines in future after a challenging time in July please?
As we continually improve our digital channels, there will be a reduced need for customers to phone or visit us. We have also started work on planning for next year’s peak periods, to ensure that we have the right resources allocated at the right times.

Why are IRD asking how clients can afford to live having made charitable donations and then disallowing donation rebate claim based on this criteria?
A client cannot claim total donations in excess of their taxable income for the year. They are limited to the smaller of one-third of the amount of their donation receipts or one-third of their taxable income for the year. Where, based on information we hold, your client appears to be claiming in excess of this we will contact them or you as their agent to question the claim, and may disallow it.

What innovations are intended around sending client correspondence, assessments and tax payment data digitally to tax agents?
Once income tax has been moved to the new technology platform, we will be in a better position to design and implement enhancements to existing correspondence and data processes. We will of course be working closely with tax agents on this. We recognise that this is an issue we need to resolve.

Why don’t you do a nationwide survey and actually ask tax agents what they want?
We remain fully committed to working closely with tax agents, bookkeepers and other intermediaries. We recognise the value they bring to their customers, and their contribution in ensuring compliance with our tax system. We engage and collaborate with tax agents in many different areas of work across the department – from consultation on policy design, through to tax agents testing our online services. We work with your professional bodies and have a secondee program for tax agents to work with us on our transformation programme. Our Research and Evaluation team do send surveys to tax agents on changes that will impact them, not every tax agent will get every survey. We also have customer validation and usability testing happening all the time, if you are interested in being involved please let your account manager know.

How’s IR going to remedy the unnecessary panic and duplication its staff are causing when contacting taxpayers directly instead of dealing with their tax agent?
Sometimes we will contact customers directly about their tax affairs, and we do strive to contact the tax agent first. In those instances where we do contact a customer directly, we encourage them to discuss the matter with their tax agent. This is part of our business-as-usual processes, and is not a new strategy. We remain fully committed to working closely with tax agents, bookkeepers and other intermediaries. We recognise the value they bring to their customers, and their contribution in ensuring compliance with our tax system.

Do you find that IR call centre staff are frustrated too and that this frustration is felt by agents?
We apologise for recent issues with contact centre waiting times, and any frustrations felt by agents. Sometimes the volumes of calls are simply too high to handle promptly. For example, in one week in June we answered 79,950 calls but still couldn’t keep up with demand, so not all calls were answered, and we had long wait times. This situation is frustrating for our staff, who want to provide the best possible service for customers. We have commenced planning for next year’s peak with the objective of improving our overall service in this area.

Why do you think the professional bodies are more in contact, and understand, ground roots agents than the IRD?
We have close relationships with representatives at the main professional bodies and they often make us aware of issues their members are facing with our systems and processes. Where issues are raised by professional bodies we know they have been impacting a number of their members, this helps us prioritise which issues to fix first.

Is an Asset or capital Gains Tax still on agenda for the tax working group, and for the coalition govt?
We can’t comment on matters being considered by the tax working group, which is an independent group brought together by the Government to consider the future of tax. But you can find out more about it at https://taxworkinggroup.govt.nz/. Similarly, for information about what taxes the government might be considering you would be best to contact your MP or the Minister of Revenue, Stuart Nash.

When will IR move away from sending email notifications that don’t include the clients IRD no and / or name
Due to privacy concerns, we restricted the amount of identifying information available in emails. We have been working to improve the ability for tax agents to identify which client the email notification refers to, and in some cases, will provide the IRD number or myIR user ID. We are still working to improve the notifications and correspondence tax agents receive, and have a team focusing on this.

We no longer receive letter or contact from IR when reviews or voluntary disclosures are finalized. Will this be changed?
We have implemented changes to speed up the processing of the voluntary disclosures. This means that tax returns that are processed by our new system can be amended using myIR. The amendments are then analysed by our analytics system and, in some instances, processed without further input from staff. The customer is then sent a Notice of Assessment (NOA) and – where applicable – a Statement of Account (SOA). Where the amendments require a staff member to review, this could result in the voluntary disclosure being processed without contacting the customer and therefore a NOA and a SOA are sent to the customer. Where staff need to contact the customer to request further information, a final letter is generally sent so that the customer is aware that officer is satisfied with the information and the review has been finalised.

I’ve had instances where IRD is contacting my clients directly. Is this a new strategy for the department?
Sometimes we will contact customers directly about their tax affairs, and we do strive to contact the tax agent first. In those instances where we do contact a customer directly, we encourage them to discuss the matter with their tax agent. This is part of our business-as- usual processes, and is not a new strategy. We remain fully committed to working closely with tax agents, bookkeepers and other intermediaries. We recognise the value they bring to their customers, and their contribution in ensuring compliance with our tax system.

Why is it tax agents cannot see contractor withholding tax on the IRD website?
This information is already available for individual contractors in myIR, however a limitation of our old system is we cannot display this for non-individual contractors. Once income tax is available in our new online system in April 2019, we will be able to display schedular payments deducted from non-individual contractors.

Tax-Pooling

Is IR allowing tax pooling of GST and PAYE?
There is no change to the current rules for tax pooling. Tax pooling funds cannot be used to meet regular tax payments such as GST and PAYE (except in periods where a reassessment has been made or an increased obligation results from an adjustment). This is because for these types of payment the amount due is known by the due date, unlike provisional tax.

How is the IR working towards better communication with Tax agents and pooling intermediaries ? Specifically 1. Tax pooling transfers 2. Managing Debt 3. Mail?
We have a range of digital channels and resources available to inform and support tax agents and tax pooling intermediaries. These include webinars, demonstration videos, and new pages on our website. In preparation for our next round of changes and upcoming peak periods, we are building on these channels and resources, and modifying them based on feedback that we have received. We are also investing more time and resources into planning for our peak periods, which will help us give more timely service to all customers. To address the specific questions, we are working with tax pooling intermediaries to move processing of tax pooling transfers and deposits into our new system. Tax pooling intermediaries will also have the option of notifying us which clients intend to use tax pooling for income tax. This will allow us to add a flag to those clients so they are not sent payment notifications prior to the transfer being processed. The upcoming changes will improve processing times and reduce unnecessary contact to tax agents and clients using tax pooling.

It’s taking 6 – 8 weeks to process payments. Why are more staff not allocated to reduce this?
We’re assuming that this question relates to tax pooling. Tax pooling is a very manual process in our current system and is managed by a small team. As it is a complicated tax product, we can’t allocate the work to temporary staff when workloads increase. In April 2019, we will move processing of tax pooling transfers and deposits into our new system. After the next release in April, tax pooling intermediaries (TPIs) will be uploading their deposit and transfer schedules directly into myIR and they will process in near real time. There will be exception cases that fall over for manual work, but most will be much faster.

In terms of debt recovery, would you consider removing some of the restrictions (i.e. 60 day timeframe) around using tax pooling to settle reassessed tax?
The 60 days was set having regard for paper systems and the need to provide time and certainty to pooling intermediaries. As our new systems come online, it is likely the 60 day period will reduce.

With the work that IR is doing with the tax pools, does it mean that we will be able to see tax pool transactions, e.g. deposits to pool, through MyIR? When?
Yes, tax agents will be able to identify funds from a tax pool in their clients account once it has been transferred from the tax pool. They will however not be able to see how much money their client has sitting in the tax pool itself.

Will tax agents have ability to update online accounts to indicate the client has current tax pooling agmt to avoid unnecessary reminders and demand notices?
We are working with tax pooling intermediaries to move processing of tax pooling transfers and deposits into our new system. Tax pooling intermediaries will also have the option of notifying us which clients intend to use tax pooling for income tax. This will allow us to add a flag to those clients so they are not sent payment notifications prior to the transfer being processed. The upcoming changes will improve processing times and reduce unnecessary contact to tax agents and clients using tax pooling.

Why won’t tax pooling be made available for non income tax types?
Tax pooling is provided where there is uncertainty of the amount of payment (during the year the income tax final liability is uncertain). Where the amount is certain, this is my PAYE liability (for example, there is no need to pool as the amount to pay is not uncertain).

Tax pooling can help non resident tax payers?
The tax pooling rules apply in the same way to non-resident taxpayers as they do to resident taxpayers. So, for example, a non-resident taxpayer who files non-resident income tax returns in New Zealand can use tax pooling to pay their provisional tax and/or income tax obligations in the same way as a resident taxpayer can.

Why can’t credit balances from IRD generated transfers be transferred forward by tax agents for clients who use tax pooling?
There are legislative restrictions that can apply to credits arising from purchased tax pooling funds when these are requested to be on-transferred, including within a person’s own tax account. Tax accounts where tax pooling transactions are present require these tax pooling restrictions to be considered by Inland Revenue to determine how credit balances can be dealt with.

Why do IRD chase clients for payments when they know there is a tax pooling arrangement in place?
In our current system, tax pooling is a very manual system and we have limited visibility of who intends to use tax pooling to meet their obligations. After the next release in April, tax pooling intermediaries (TPIs) will be uploading their deposit and transfer schedules directly into myIR and they will process in near real time. There will be exception cases that fall over for manual work, but most will be much faster. Also, there will be a new feature built into myIR that will allow TPIs to upload details of known clients that we will use to stop collection activity on the income tax period being funded. This way we will know which of their customers are expected to utilise tax pooling to offset their income tax obligations.

Can IRD and TMNZ talk to each other to flag in the IRD system who are TMNZ clients so that the client doesn’t receive statements showing lots of tax & int owing
In preparation for release 3, we are working with Tax Pooling intermediaries to move processing of tax pooling transfers and deposits into our new system. Tax pooling intermediaries will also have the option of notifying us which clients intend to use tax pooling for Income Tax. This will allow us to add a flag to those clients so they are not sent payment notifications prior to the transfer being processed. The upcoming changes will improve processing times and reduce unnecessary contact to tax agents and clients using tax pooling to meet their obligations.

Will you consider allowing taxpayers on the AIM method to use pooling?
We are considering this at the moment and will keep tax agents informed.

Is it possible to show, when a taxpayer is under an arrangement, on statements a notice to that effect so accruing penalties and interest are less alarming
The statement of account that is sent from our new system advises if debt is under an instalment arrangement. This information will show on statements for all tax types once they are in the new system.

When tax option is used rather than tax purchase we’ve had clients denied the imputation credit for the effective tax date, only recognised on payment date, why?
‘Tax options’ and ‘tax purchases’ are both treated as ‘purchased funds’ under the imputation rules. Section OB 6(3)(a) of the Income Tax Act 2007 determines the credit date for purchased tax pooling funds but not until the funds are actually used to pay income tax and/or provisional tax. The (valid) effective date chosen for the pooling transfer into the company’s income tax account will be the credit date for imputation purposes. Section OP 9(3)(a) is the equivalent provision for consolidated imputation groups.

Process

With forming new entities it is hard to get an IRD number without a bank account but the Bank won’t open an account without an IRD number. Can this be fixed?
A recent legislation change means that if it’s not possible to get a New Zealand bank account or customer due diligence, we may still issue an IRD number if the applicant can satisfy the Commissioner of their identity. More information about this is available on our website.

Will tax agents be able to apply for individual IRD numbers given the information that they now have a responsibility to collect under the AML regulation?
This is not currently an option, but certainly something we will consider.

Why do your START audit letters go to the client?
Letters issued from an audit automatically re-direct to the tax agent where the agent is linked and also has the customer master link on top of any account links. Where this is not the case, the letters default to the customer and the user has to manually override the address, which sometimes results in oversight and the letter goes to the customer where it was intended to go to the tax agent.

Why does IR take so long to release tax refunds. And why does it often take a phone call to get the refunds released?
We aim to process returns and issue any applicable refunds within 10 weeks of receiving the return. This is a standard timeframe across a number of return types, and has been in place for a number of years. Please note however that there are many circumstances where there are interdependencies with other taxpayers for customers’ final entitlements to be calculated correctly. For example, to calculate a customer’s Working for Families end of year entitlement, we may need their current or previous partner’s return to be filed.

Why penalty is charged while IR reviewing the account, but tax agents do not have access while it is under review?
An account can be reviewed for many different reasons, and it’s correct that the tax agent won’t be able to see the account if it’s under review. This prevents anyone from making a change to an account – or acting based on an assessment – whilst we are reviewing it. That being said, tax agents should already know what the assessment is on the account, and background knowledge of penalties and interest.

When income from interest and dividends become compulsorily notifiable to IRD will you be able to differentiate PIE income when assessing personal tax returns?
Financial institutions will report PIE income separately. After April next year we will display this information in your clients’ income profile separately to other investment income.

Why does IR send out debt letters when there are credits showing in tax return to be transferred in from spouse/related party and therefore no actual debt?
This can happen where the debt due date passes before the transfer has been processed. While we are working between two systems some transfers are completed manually so there can be timing issues. Once most tax types are in the new system (April 2019) transfers will process faster, (in most cases overnight) which will resolve this issue.

In an IRD tax update it was said by IRD that for every $1 spent on audit you get $12 back. Why doesn’t IRD spend more resources on tax cheats?
While our audit work is very efficient – in the past year we achieved a return on investment of $8.31 against a target of $7 – most of our customers get it right and file their returns and make payments on time. We recognise that tax can be difficult and sometimes people make mistakes, so we focus on areas where we know people are more likely to get it wrong and provide education, tools and support to help them get it right from the start rather than solely apply an audit approach. Where people intentionally choose to operate in the hidden economy and not accurately report all of their income, or attempt to receive refunds and entitlements they are not eligible for, we take appropriate actions. In these cases, an audit approach helps protect the integrity of the tax system so our many stakeholders, including other complying businesses and the public, continue to have trust and confidence in us.

The IRD are looking to collect more and more data on taxpayers. What are they planning to do with that data?
With more data, we are able to create a simpler, more intelligent tax system. For example, with the extra data that we are getting through payday filing, we are able to more accurately calculate individuals’ and families’ tax obligations and entitlements.

Will IR move to taking all transactional data as opposed to total strangers reporting?
Better harnessing transactional data is at the core of our current business transformation programme, and something we will continue to pursue into the future. Central to this is our gateway service, which allows businesses, financial institutions and other entities to file information directly from software. This alleviates some of the compliance burden, as they are able to provide us with data that they collect through their natural business processes. This data also gives us the ability to make tax easier and more certain for our customers, and simplify the system as a whole. That being said, we don’t intend to capture all the data held within the natural accounting systems used by customers.

When can we attach documents to secure emails?
You can do this already for tax types that have transferred to the new system. As new tax types move across, this will become available (for example, income tax from April 2019).

Would IRD consider bringing more core functions away from Wellington and Auckland to Dunedin. ACC leads the way in that regard. Why not IRD?
We already have staff in a variety of roles across the country. As technology continues to improve, it will become even easier for our staff to work outside urban centres.

Can we take IRD benchmarks as a good indication of expected industry margins?
The benchmarks we publish are sourced via Stats NZ and there are a number of qualifications to the data used. They are an indicator of financial performance only, and act only as a guide and comparison for business operators. They are not an indication of the tax liability of a business or their level of reporting compliance.

When will we be able to send forms – e.g ird number applications – via email? Post is now unreliable.
As we transform, an increasing number of services will be available digitally. Some customers can already apply for IRD numbers through our website, including non-individuals and new migrants. SmartStart is also available for registering the birth of your child and applying for an IRD number at the same time.

Why is it still so difficult for non-resident companies to get IRD numbers? Currently every shareholder or director needs to get verified address, name etc?
We have robust processes in place to verify the identity of all non-resident entities that apply for an IRD number. This includes specific requirements to have either a fully functional New Zealand bank account or confirmation of customer due diligence being completed by a New Zealand reporting entity. It’s important to remember that these identity requirements are part of global initiatives to combat tax evasion and other financial crimes.

Is IRD affected by the ACT/CFT Act and if so will that affect tax agents and taxpayers from a Client Due Diligence perspective?
Tax evasion is a predicate offence to money laundering and a serious crime, so tax agents should pay close attention to their obligations under the AML/CFT Act to ensure their services are not misused by clients. The Department of Internal Affairs is the supervisor for accountants.

The DIA advised transferring funds btw a client’s tax years/tax types is an AML captured activity how is IRD gearing up to deal with this if CAs don’t?
Inland Revenue is not a reporting entity under the AML law. However, should we identify money laundering, information may be shared with other law enforcement agencies, but only strictly in accordance with applicable information-sharing provisions and tax secrecy rules.

When returns have been filed and there is an error or request for more information why aren’t we informed?
Tax agents are informed about requests for information as part of our current processes. In respect of errors, the new system will give tax agents greater visibility.

At a policy and collection level, has brightline been successful?
The brightline test was enacted to ensure that residential property speculators pay tax on the gains from their activity, and to attempt to improve housing affordability for owner-occupiers by reducing speculative demand. The answer for the first of those aims is yes. The brightline test has resulted in tax being collected where properties have been sold within the brightline period. To date analysis of the 2016 tax returns suggests that less than 10% of taxable property transactions that were within the two year bright-line period were taxable under the bright-line provisions. While about 50 more residential property transactions still need to be reviewed for this period, audit results confirm compliance is currently at about 80%. This level of compliance is significantly better than the initial estimate of less than 50% compliance with the bright-line test. The other benefit of the bright-line test and information generated when land is bought or sold, is that we are now able to see and follow-up on cases of property speculation a lot more easily than it could in the past. In respect to the second of those aims, we don’t currently have any information on the impacts of the brightline test on speculative demand.

Regarding AML, I don’t think it is fair for us to monitor and make immediate report to NZIA, because when we see the money that may be two months after (when preparing GST)
The Department of Internal Affairs is the supervisor for accountants.

As IRD value their people, what support will be provided to 33% of staff without a job by 2021?
We do expect the composition of our workforce to change as we further implement our transformation programme. The main objective of our transformation is to organise by customer types rather than Inland Revenue functions, bringing our service people closer to customers in the way they do their work. Our workforce will be smaller in 2021. This is a result of simplifying and streamlining our tax system, and  expanding the range of services that can be done online. The reduction in our workforce will be partly achieved through natural attrition. We remain totally focused on helping our staff develop their capabilities – both now and into the future. For those staff that do leave Inland Revenue, we provide extensive outplacement assistance, including CV writing and interview skills.

If IR is keen to remove “peaks” has it considered looking at filing due dates for income tax returns and whether this could be smoothed?
We are not proposing changing the filing due dates at the moment and we will still continue to provide the ability to spread filing dates over a year. For example, using the tax agents’ extension of time, which keeps things smooth over the ‘peaks’.

Simple requests like change of balance date or request to store records offshore are taking months to be processed on Secure mail. What is up with that?
We work to provide a response within 10 days. Depending of the complexity of the enquiry and customer demand however, it may take a little longer.

We recently had a forestry client that wanted to make a payment into the Income Equalisation Scheme. IRD only accept payment by cheque. Can this be modernised?
This is currently on our roadmap and in scope to bring into our new modern system, which will enable digital submission of information and digital payments.

How does the new technology change Inland Revenue’s audit selection process? e.g. red flags.
Broadly speaking, advances in technology allow us to better harness the power of data to analyse and assess where the biggest risks are. This allows our audit teams to focus their time and effort on the audits themselves. Our new online system is fully integrated, which makes it very easy for all staff to know if there are audit or collection actions underway – this is something we did not have before. The new system also has analytical capability to enable us to add rules that dictate which returns are stopped for queries. We are also investing in a new Data and Intelligence Platform that will enable us to do more advanced analytics than previously possible.

For some tax types an agent cannot setup an online payment arrangement, if the client does not also have a MYIR login. We need to act for the client who cannot.
For clients who do not have a myIR login, you can submit an instalment arrangement proposal online. More information is available on the IRD website.

Why is IRD allowed the make transfers between tax types without contacting the client (often the client has other intentions for those credit balances)?
Under current tax legislation (Subpart RM of the Income Tax Act 2007 and section 173T of the Tax Administration Act 1994) the Commissioner has the authority to offset tax credits/refunds to satisfy another tax liability. This is something that customers don’t always request, and we’re not obliged to seek their consent. By performing offsets, we reduce the incidence of penalties and interest on outstanding balances, and also reduce the risk that customers are exposed to possible prosecution for failing to meet their payment obligations.

Companies that worked via recruitment agencies are having the withheld tax transferred at 1/4/18 to shareholders creating LPP for no prov tax. Changes expected?
Generally, withholding tax on schedular payments can’t be used to offset, or count towards, provisional tax if you are using the estimate, uplift or ratio method. If a taxpayer doesn’t meet their provisional tax filing obligations, they may be subject to penalties. For businesses that use the Accounting Income Method for provisional tax however, there is functionality in their software to account for withholding tax paid, meaning that it can be used to offset an AIM provisional tax liability.

Why do bulk uploads of GST returns take several days to appear in the clients account
Returns will appear in an account once they have been processed. If the questioner thinks there may be a problem, they should contact their Community Compliance Account Manager, or send us a secure message through myIR.

Using the new km vehicle rates for employees how is a monthly reimbursement to be calculated when the total annual travel of the vehicle is not yet known?
Knowing the total annual travel is not necessary at the time of monthly reimbursement – it is only when the threshold is reached that any rate changes might come into effect. However, this is only when total travel exceeds 14,000km (threshold to be used when recorded in log book) or when business travel exceeds 3,500km (threshold to be used when no log book is
kept). In both cases, the employer should have the details to be able to change the rate when the threshold is exceeded.

The new mileage rate claim requires us to know how many kms travelled in a year for the 2018 year 16 months after the mileage should have been noted
We are aware of this situation, and have a transition rule in place. The tier one rate of 76 cents may be used for employee reimbursement for the remainder of the 2018/2019 income year – regardless of kilometres travelled. The two tier rates will not apply until the 2019/2020 tax year.

What is IR’s current thinking on the IR10 disclosure requirement? Will we see revolutionary changes to it?
There won’t be any ‘revolutionary’ changes in our latest release, but there will be an improved experience in myIR and gateway services. There will be no changes to our existing e-file or paper return channels. The Tax on Income roadmap is a five year plan, and the IR10 has been identified for potential future change.

This is what people said was most valuable about our 2018 Roadshow

Better clarity around the new provisional tax rules

A better understanding of how to plan clients payments from now on

Tax Pooling advice, and a future IT perspective

To find out more about TMNZ, & how it could benefit the clients I work for

The IRD Business Transformation update

Good to hear from IRD. You don’t get an opportunity elsewhere

Networking

Great opportunity to hear from the IRD about where things are going, to get the brain thinking

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