AGENTSanswers - 2006

AGENTSanswers Issue 77 February 2006

• Look - Link - Do
• Reminders
• Tax credits for working families
• Excess imputation credits
• Income thresholds for student loan repayments and interest write-offs to rise
• Ordering stationery
• Audit activity
• Family assistance cessation
• Look at Account Information - security.

"Look - Link - Do"

Return information available online

You can now look at the details from a number of returns for your clients online through our Look at Account Information service.

This enhancement is a response to feedback from many of you who want to access more of your clients information.

It is one of a number of changes being made to the Look at Account Information service to provide you with a self-service alternative to the tax agents 0800 line.

The following return details are now available:

• View return details
  
  In response to many requests we have made the return keypoint information for the following returns available online:
  
  • employer monthly schedules (IR348)
  • GST returns (IR 101)
  • imputation returns (IR 4J)

You will be able to access the keypoint and assessment details by a link from the assessment transaction in the details screen for the relevant tax type and period.

• View return document lodgement number (DLN)
  
  The DLNs for all returns that have been issued but which have not yet been filed are now available in the summary pages.
  
  All you have to do is copy the DLN from the Look at Account Information screen and paste it into the relevant field on the online return.

Some additional useful tips about the return and DLN information now available follow.

Return details

What is a keypoint?

The keypoint and its number refer to the information that is put onto the printed paper copy of the return and the number that appears next it on the form. This may not be the same number as seen when filing an internet version of the return.

What does it mean when it says keypoint adjusted ?

This means that the latest assessment was made after these keypoints on the return were changed. It does not show all the keypoints that have been changed since the return was filed, only the latest changes.

Where can I find the annual gross amount for wages?

You need to view the employer monthly schedule details for each months PAYE assessment and add up the 12 months gross figures to get the annual gross of wages.

What is meant by interim return ?

An interim imputation return is one that was filed prior to the end of the imputation year and covers the period from the beginning of the current imputation year to the date specified by the company.

DLN information

What return types can be filed online through Inland Revenue's website?

You can file the following returns online for your clients using the DLN information:

• IR3 and IR income tax returns
• GST returns (IR101)
• quarterly, annual and income year FBT returns (IR420, IR421 and IR422)
• gaming machine duty returns (IR680)

Check the return and DLN information now available online and see how it can assist you.

If you have any questions about the Look at Account Information service, or if you would like to register and begin taking advantage of its time-saving benefits, your agent account manager will be happy to help.

Reminders

Third return filing date - 17 February 2006

The third extension of time (EOT) filing target date for clients returns is 17 February 2006. The percentages due to be filed by this date are:

• standard target 80%
• E-File target 78.5%
• late balance date target 75%

If you have any concerns about meeting your filing targets or about your client list, please contact your agent account manager.

The 2005-2006 EOT agreement.

Provisional tax due date (third instalment) - 7 March 2006

For clients with a standard balance date (31 March), a reminder that 7 March 2006 is:

• the due date for payment of their 2006 provisional tax, and
• the last date for estimating (or re-estimating) their provisional tax for 2006.

2007 tax tables

We will be sending PAYE deduction tables, for the year ending 31 March 2007 in early March 2006.

The rates in these tables will apply from 1 April 2006.

2006 CD ROM

We are currently working on the 2006 version of the CD Rom and this should be available to order by the end of April. Unlike previous years you will not automatically receive the CD but will be able to order it as a stationery item through INFOexpress or StationeryXpress.

Tax credits for working families

From 1 April 2006 up to 85,000 more New Zealand families will become eligible for family assistance from Inland Revenue and this could include many of your clients.

The changes are part of Working for Families, a package designed to make it easier for people to work while they are raising a family. Changes to family assistance include higher income limits and the new in-work payment.

Families who weren t previously eligible for assistance may now find that they are and families will also be able to earn more before payments start to reduce, says Vaughan Crouch, National Manager (Social Assistance), Inland Revenue.

For example, a family earning $45,000 per year with two young children currently receives $46 per fortnight from family assistance. From April 2006 that will increase to $280. A family earning $60,000 per year with two young children is currently not eligible for family assistance but from April 2006 they will receive $164 per fortnight, says Vaughan. The changes will make a big difference for many families.

If you think any of your clients may qualify for family assistance go online to www.workingforfamilies.govt.nz and check it out or call 0800 257 477 and use our calculators.

Other Working for Families components include childcare assistance and the accommodation supplement from Work and Income. To find out if your clients qualify for any of these, go to the Working for Families website or call us on 0800 774 004.

Excess imputation credits

The Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 contains new rules for the treatment of excess imputation credits received by individuals and unincorporated clubs and societies.

Background

Excess imputation credits are created when shareholders receive dividends that give them New Zealand imputation credits that are greater than their total tax payable for the year. Unlike other credits, such as resident withholding tax, unused imputation credits cannot be refunded.

Key changes

The key features of the changes include:

• excess imputation credits received by individuals and unincorporated clubs and societies will no longer be converted to a deemed loss, but will simply be carried forward. These can then be offset against the taxpayer's total tax payable in a later year.
• taxpayers with excess imputation credits are required to file an income tax return. For individuals, this means filing an IR 3.
• excess imputation credits must be extinguished on a dollar-for-dollar basis when outstanding amounts of tax are written off. If the taxpayer has a loss and excess imputation credits carried forward, the loss must be extinguished first.

Application date

The changes apply to imputation credits received in the 2005-06 and later tax years.

Operational impacts

Any existing deemed loss from the 2005 or earlier income years will continue to be carried forward as a loss until it is fully offset against net income.

Companies, estates, trusts, Maori authorities and incorporated clubs and societies will continue to convert any unused imputation credits to a deemed loss.

Inland Revenue will continue to calculate excess imputation credits based on the information supplied in the taxpayer's personal tax summary or income tax return.

You will be informed of the balance held by Inland Revenue for your clients in their personal tax summary or by letter for those who file an IR 3 or IR 9. If your client has a loss and excess imputation credits carried forward, you will receive one letter containing details for both.

A new keypoint will be added to the 2007 year IR 3 and IR 9 income tax returns so that excess imputation credits brought forward can be claimed.

For more information

For more information about this change and the reason for it, see Tax Information Bulletin (TIB) Vol 17, No 7 (September 2005).

Income thresholds for student loan repayments and interest write-offs to rise

The income threshold for student loan repayments will rise from 1 April 2006.

The income level at which borrowers must begin to repay their loans will rise from $16,588 to $17,160. Borrowers whose income is below the repayment threshold will not have to make repayments on their loans.

Also as of 1 April 2006 all borrowers who are resident in New Zealand for more than 183 days in a tax year will be entitled to a full interest write-off on their loans.

More information about the zero interest scheme will be made available soon.

Ordering stationery

Please remember to use the appropriate option for ordering stationery:

• INFOexpress - stationery is ordered as a single item eg a pad of IR 586, request 50 forms
• StationeryXpress - allows bulk ordering of items
• alternatively you can download all forms and guides

Audit activity

Since July 2005 we have conducted a number of field visits to remote locations. The purpose is to raise our profile and to provide an opportunity to educate, test compliance and answer questions.

The officers involved make an effort to meet with all the tax agents in the area and advise you of their presence and the purpose of the visit.

Common issues identified resulting from these visits include:

• PAYE obligations
• maintaining vehicle logbooks
• private use adjustments for GST
• record keeping and
• fringe benefits.

We have also promoted our free advisory services and the calculators and information on our website.

We test compliance through system-focused spot checks that are randomly selected and conducted with the agreement of the taxpayer involved. These spot checks are an opportunity for us to see the business in the normal course of its operations.

We have received positive feedback from taxpayers and agents in the regions that we have visited.

Family assistance cessation

We have received enquiries relating to the cessation of family assistance for some of your clients. This has happened previously on accounts that have had no activity for two years to eliminate unnecessary correspondence being issued.

In the situation where your client is now entitled to receive family assistance you will need to call the agent s line with the new start date and any other details that may need to be updated.

Look at Account Information - security

Your agent account manager will have told you about the service's emphasis on information security and the need to have internal processes in place to protect that security. Have you thought about what happens to a user s access when they leave or you transfer your client list or cease business?

• Do you have a process in place to cancel a staff member's user ID when they leave?
• Do you have a process in place to cancel user IDs when moving your client list from one IRD number to another?
• Have you thought about what will happen to active user IDs when you cease business?

The implications of not having a process are that the staff member may continue to access all the online services, eg file an employer schedule, send and receive mail and look at account information applied for during registration. Your personal and/or business account information and client accounts may also be assessed.

We advise you to make cancelling a user ID online part of a staff member s exit process. However, if a staff member has left without this being done, the business has already ceased, or the client list has been transferred and it s not possible to ask users to cancel their user IDs online, call us on 0800 473 249 and ask to cancel them.

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Date published: 13 Feb 2006

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