Annual Report 2005 - Part 3
Streamline and simplify tax processes
Simple and convenient processes encourage people to meet filing and payment obligations of their own accord. In 2004-05 we expanded online information services, simplified tax processes for small to medium sized enterprises, and worked with tax agents to improve access to client information.
Enhancing our online services
This year we continued to progress our e-enablement strategy, which aligns with government strategies such as the e-government strategy and the Growth and Innovation Framework. We aim to give quick and easy access to online information and services to reduce the time people spend meeting their obligations or to receive entitlements.
In 2004-05 we:
- redesigned and improved our website
- launched specialist websites for specific customer groups
- expanded online services that enable people to look up their account information.
Our websites
Our website www.ird.govt.nz was named in the State Services Commission report Achieving E-government 2004 as one of three best practice examples in the public sector; the others were Statistics New Zealand and Archives New Zealand.
It has consistently been in the top three most visited New Zealand Government websites over the last two years. This year the average number of page views per day 1 to our website was over 150,000, an increase of 113% compared to last year.
We recognise that there is considerable movement of businesses across the Tasman. So to make it easier for people considering business opportunities on the other side of the Tasman we carried out a joint initiative with the Australian Taxation Office (ATO) to provide information on our respective websites.
Along with comparative information on the two tax systems, the new web-based information explores the tax implications for a range of scenarios from selling goods and services across the Tasman, to setting up a permanent place of business in Australia. The direct links to the information are:
yoursituation-bus >nz-in-australia and www.ato.gov.au/businesses
We also provide a website specifically for student loan borrowers, www.owezero.org.nz which has a repayment calculator and user-friendly information about repayment options.
Online returns and payments
We have been actively promoting the use of online return filing as an alternative service to e-file and our paper-based services. All major returns can be filed online and this year we have seen a 55% growth in the volume of returns received through the internet.
All major banks now offer online tax payment services, and this year we have seen a 95% increase in the number of payments made this way compared to last year.
In May 2004 we introduced a credit card option to make it easier for student loan borrowers overseas to make payments and there has been a steady growth in repayments received this way. In September 2004, this service was rolled out to child support paying parents. For the year ended 30 June 2005 we received 5,753 credit card payments for $4.6 million.
Look at Account Information
The Look at Account Information service, which lets customers view details of their accounts online, was expanded and made available to all individuals from April 2005.
The service has been available to student loan borrowers and tax agents for over a year, and to child support customers since September 2004. Customers registered to use the service have increased steadily to 54,068 by June 2005, compared to 35,173 in January 2005. Account information was accessed 337,841 times during June 2005, compared to 101,237 during January 2005.
Online registration of companies
Working with the Companies Office, we have introduced an online service where people can apply for a company IRD number at the same time as registering a company for incorporation. It is now quicker and easier for customers to get their new company's IRD number as they only deal with one government agency. The transfer of data through secure business-to-business processes also gives greater security and accuracy. The site address is:
| Bringing better service online Our website has been upgraded to simplify people's interactions with Inland Revenue. There are now more than 70 services that can be accessed easily, in a fast and secure environment, at any time. The website provides comprehensive information for finding out about obligations and entitlements concerning tax, rebates, child support, family assistance and student loans. It also gives access to:
Our online Look at Account Information service has proved very popular, and we have received very positive feedback from tax agents, student loan borrowers and child support customers: "I wish I had realised that my account info was so easy to access... now I can keep up with how my accounts stand just by logging on. The information is well laid out and relatively easy to understand." |
Simplifying tax for small- and mediumsized enterprises (SMEs)
The drive to simplify tax for SMEs was advanced in 2004-05 with the implementation of important policy measures and completion of research to set a benchmark for compliance costs in this sector. Improvements in electronic services, to businesses and to tax agents, make it easier for businesses to access information and to file returns.
Tax policy initiatives
Policy initiatives announced over the last year will either reduce the cost of compliance or make it easier for SMEs to meet their obligations. The initiatives were put forward in the Government's 2003 discussion document Making tax easier for small businesses, and followed consultation with business operators and their advisors.
The proposal for a discount for income tax payment in the first year of a new business came into effect on 1 April 2005.
The Government has also proposed legislation that would allow for:
- Alignment of provisional tax and GST payment dates so that they are paid together on the 28th of the month. A phased introduction would begin with moving the GST payment date to the 28th of the month for taxable periods after 31 March 2006.
- Provisional tax payment calculations based on GST turnover (optional); this would become effective for the 2007-08 tax year.
- A subsidy for payroll agencies-proposed to start 1 April 2006.
Proposed changes to the fringe benefit tax rules would mean that cell phones and laptops will be exempt from tax if they cost less than $5,000 and are used primarily for business.
Following a recommendation from the Government's Small Business Advisory Group, we appointed a National Manager SMEs to liaise with stakeholders and make sure that we understand and consider the interests of SMEs.
Benchmarking compliance costs
Independent research measured the current tax compliance costs of SMEs so that changes to compliance costs can be monitored over time. This will also allow us to measure the impact of tax policy proposals more accurately before they are implemented.
About 2,300 businesses responded to a survey late last year. Results from this survey found that if internal and external compliance costs are totalled:
- the average business faces a combined annual tax compliance cost of $4,024 with GST and income tax-related costs by far the largest contributors
- cost increases with business size, from $2,932 for businesses with no employees, to $7,649 for businesses with 20 or more employees.
Costs were generally lower than those measured in a 1992 study. For example, for small firms costs fell from about $5,000 to an average of just over $3,000 per year. Most of the reduction is due to less time spent on PAYE requirements.
Working closely with tax agents
Inland Revenue recognises that tax agents have a key role in maintaining an effective system of tax administration. Our relationship with agents and the New Zealand Institute of Chartered Accountants is positive and we greatly value this.
Our call centres give priority to tax agents' calls and 60.1% were answered within 20 seconds, an improvement over last year's result of 52.6%. Although this performance remained below target, 96% of tax agents surveyed this year rated our service as good or very good. However, we are continuing to highlight the benefits of self-service options to tax agents, particularly the Look at Account Information service which provides enhanced online information.
Our tax agent account managers are also actively promoting the service and have also focused on improving compliance among tax agents' clients. They targeted the 10 agents having the highest number of clients with outstanding arrears which were not under positive collection action. Through our efforts we successfully reduced this debt by 22%.
In May 2005 we launched Tax agent debt application, a new software tool that gives agents summary information of their clients in arrears. We expect it will help tax agents to improve client payments in a proactive way.
Talking with tax agents There are around 4,700 tax agents currently registered with us, representing more than 1.5 million taxpayers. Our longstanding and valuable relationship with tax agents through the New Zealand Institute of Chartered Accountants means that we can discuss issues of mutual interest and reach tax agents around the country. It allows us to talk about about the way we provide services as well as policy issues that affect taxpayers. We have held many events throughout New Zealand during the past year, from our people going on roadshows to visit tax agents locally, to organising groups to come and visit us to learn how things work behind the scenes. Recently, for example, 25 Wanganui tax agents spent a day visiting one of our processing centres and a call centre. "We've done this twice before with agents from other parts of the central North Island and they've been incredibly well received," says Agent Account Manager Vicki Cronin, who helped organise the event. "It's helped build relationships and is a real eye-opener for the agents and their staff. They're especially amazed at the volumes of material we deal with." Events like these are also a good opportunity for us to explain our initiatives to make tax agents' interaction with us easier, such as the enhanced services for tax agents on our new-look website. |
1 Page views refer to the number of times that web pages were viewed. "Page views" are a different measurement to "hits" or "visits". When someone views a page, they will often generate multiple hits but only one page view, as each extra image or element on a page generates a hit.
Date published: 14 Oct 2005
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