We are responsible for collecting revenue for the government. The most effective way for us to do this is to ensure that taxpayers file their returns and pay any resulting tax on time. This year, 83% of tax owed by 7 February was paid on time. Outstanding returns and debt cost both Inland Revenue and the individual or business.

• Filing
• Debt
  • Individuals and student loan borrowers
  • Business and employers
  • Child support
• Intermediaries and tax agents

Filing

Filing non-compliance is often caused by people not understanding or not knowing their tax obligations. If a customer receives additional income on top of their salary and wages, including interest and dividends, they may need to do an end-of-year square-up by confirming a personal tax summary (PTS) or filing an Individual tax return (IR3).

Working for Families Tax Credit customers who are self-employed, own a business or a rental property must file a return at the end of each year to make sure they receive the correct entitlement.

Our records may show when an individual is required to file an income tax return, but if their circumstances have changed, eg, they no longer receive rental income or income from an estate, trust or royalties, they may not have to. If you think you don't need to file an income tax return you should contact us. If you don't file and we're expecting to receive a return we may charge you a late filing penalty.

To make it easier to comply we provide a number of ways for individuals to update their circumstances. We'll contact individuals early when their returns become overdue, and each year we run a nationwide advertising and media campaign to remind people of their end-of-year responsibilities.

We're reviewing our annual square-up process to make it easier for individuals to meet their obligations. We're also developing a strategy to encourage individuals to interact with us, using our secure online services.

All businesses are responsible for filing GST, EMSs and income tax returns on time. At the end of the tax year businesses must file an income tax return that includes all income and business expenses for the year. If returns aren't filed on time the customer may have to pay late filing penalties.

If you think you won't meet your filing obligations let us know early. If you don't notify us and continue not to file we will act firmly and prosecute where needed.

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Debt

If the correct amount of tax is not paid throughout the year, or repayments are not made as agreed, customers may end up with a tax bill.

Individuals and student loan borrowers

Individuals can get into debt at the end of the tax year by not paying the correct amount of tax throughout the year. When tax becomes overdue we contact individuals early to encourage them to pay what they owe. Customers can make payments through a number of channels, including credit card or online banking or at any Westpac branch.

New student loan debt is continuing to grow, in part by the increased number of people taking out a student loan. Most borrowers meet their repayment obligations, but if a resident student loan borrower hasn't met their current year repayments we contact them and encourage them to pay the overdue amount. This could be by setting up instalments and direct debits, or applying for hardship relief. If a borrower hasn't attempted to pay an overdue amount we can issue a deduction notice against their wages. If an individual chooses not to comply we will take enforcement action where needed.

If a student loan borrower plans to go overseas for six months (184 days) or more they must contact us before they leave to find out about their obligations, provide their contact details while they're away and contact us again when they return. In most cases we charge interest on borrowers' loans while they're out of the country.

Customers living in Australia or the United Kingdom can easily make repayments using Orbit Remit, a money transfer system that lets people make repayments to Inland Revenue through internet banking at no charge. Borrowers living in other countries can make payments using a credit or debit card, telegraph transfer, foreign bank draft, personal foreign cheque, or by foreign postal order or money order.

We're actively contacting overseas borrowers who have student loan arrears to get them to repay their loans and any outstanding debt.

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Businesses and employers

Every business must provide information and pay any amount owing by a given date. The economic downturn created challenges for us in managing the growth of tax debt. We know the impact of the economic downturn will continue into the next financial year.

Generally, income tax, GST and PAYE are paid in instalments over the year. If a business thinks they may not be able to meet their filing obligations, or if they get behind in their payments, they should contact us immediately.

When a debt becomes overdue we contact businesses early. We use a targeted approach based on their compliance behaviour, and encourage them to pay in full or make a repayment arrangement. We'll continue to focus on outstanding income tax, GST, PAYE debt and on businesses that have defaulted on instalment arrangements or demonstrate serious non-compliance.

A number of employers are not showing KiwiSaver deductions for their employees on their employer monthly schedule , others are not showing or paying their obligatory employer contributions. We'll focus on employers who aren't meeting their KiwiSaver requirements on behalf of their employees.

We'll act firmly if a business ignores its tax obligations and tries to gain an unfair advantage over businesses that file and pay on time.

Child support

We assess and collect child support payments from parents not living with their children. The money is passed on to the main caregiver to help with financial support for the child. One of our biggest issues is finding parents who change address and don't update their contact details. If we can't track them down they start to build up a debt, plus penalties, which they have to pay when we make contact.

We actively manage liable parents who are not meeting their child support obligations through a case management approach. A case manager continues to monitor the paying parent until they consistently meet their payment obligations on time.

The level of child support debt owed by liable parents living overseas, particularly in Australia, is increasing. Liable parents living overseas represent only 8% of child support debt cases, but they equal 22% of the total outstanding child support debt. We have a data-matching arrangement with New Zealand Customs. They notify us immediately when a parent with a child support debt enters or is about to leave New Zealand.

We're contacting liable parents living in Australia who aren't making any payment towards their child support arrears or meeting their ongoing obligations. If they continue to ignore their obligations we'll pass their details on to the Australian Child Support Agency who will follow up on them.

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Intermediaries and tax agents

There are two core qualities of a high-performing tax agent - they file their personal and associated entities tax returns on time and they pay their taxes on time, enabling their clients to do the same. Most tax agents comply with their personal tax obligations and, where needed, we've worked directly with individual agents to improve their compliance.

We regularly update the New Zealand Institute of Chartered Accountants about tax agents who don't make payments when they should. We're continuing to monitor tax agents' compliance and we're working with those who don't meet their responsibilities.

Tax agents have extended time to file clients' income tax returns and must file 100% of returns by 31 March. If an agent falls short of this requirement two years in a row, they may lose their extension of time arrangement for all their clients' returns.

Some people engage the services of a personal tax summary intermediary to check for a tax refund. We've seen a significant increase in the number of end-of-year square-ups as a result. There have been several issues with the accuracy of personal tax summaries submitted by intermediaries. We're continuing to work with intermediaries to improve the accuracy of the information they supply on their clients' behalf.

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