• Getting it right at source
  • Employer monthly schedules
  • Resident Withholding Tax
  • Non-resident contractors
• Keeping personal and business details up to date
  • Changes to family and individual circumstances
  • DIY tax refunds
  • Changes to business or employment

Receiving the right information at the right time ensures that customers can meet their obligations and receive their correct entitlements. When we receive inaccurate, incomplete or late information it affects the accuracy of our assessments and calculations, and takes longer to process. This can result in customers under or over-paying their tax, receiving the wrong entitlement amount or their contributions being delayed.

Getting it right at source

The process of paying the correct amount of tax or receiving the right entitlement relies on accurate information from a number of sources. If any information is incorrect, missing, or late it affects our assessment. It's important we receive accurate information at the point where tax and payments are deducted, eg, employers and banks.

The person or business providing the information is responsible for making sure it's correct. For example, it's an employee's responsibility to use the correct tax code and their employer's responsibility to then deduct the correct amount of tax from their wages.

Interactions and information flow

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Employer monthly schedules

Employers must file an employer monthly schedule (EMS). It gives us details of their employees' deductions, including PAYE, child support and student loan payments, and KiwiSaver contributions. It's important that employers file them on time but a significant number are still outstanding each month, affecting the accuracy and timeliness of payments, deductions and contributions.

We also receive a number of EMSs that have inaccurate information. A small error can result in an employer's entire EMS being rejected. This can cause significant delays for employees, employers and Inland Revenue and reduces our ability to make sure income, entitlements, contributions and payment obligations are correct and can be properly calculated.

We're working on a programme of activities to help employers improve the accuracy and timeliness of their EMSs. These include regular updates on common errors and seminars to help employers fill in their schedules accurately, and proactively contacting businesses which have EMSs outstanding. We also have an active account management service for larger employers.

Resident Withholding Tax (RWT)

A significant number of individuals are continuing to use a lower rate of RWT than they should and are paying the wrong amount of tax on the income from their investment as a result. For many people it's a genuine mistake because they don't know their correct rate, while others are continuing to use the incorrect rate deliberately. They're also not including their interest income in their tax return or on their personal tax summary (PTS), which impacts on their entitlements and liabilities.

We're continuing to raise awareness about which rate customers should use. We will be contacting individuals who persist in using the wrong rate and we'll conduct investigations when appropriate.

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Non-resident contractors

A non-resident contractor is a person, company or other entity who is not a tax resident in New Zealand and who has a contract, agreement or arrangement to perform a contract activity here. A number of non-resident contractors don't declare their New Zealand income and comply with the PAYE rules for their employees. Their non-resident employees also fail to declare their New Zealand income and avoid their tax obligations.

We're introducing a programme of activities to raise industry and non-residents' awareness of their New Zealand tax obligations and what happens if they don't comply. We're looking at the level of non-compliance in the New Zealand business community and ways to raise awareness of their obligations.

If you come to New Zealand or bring people here to help in the Christchurch earthquake recovery, please contact our Non-Residents Contractors Team to discuss your circumstances and find out if any tax exemptions apply.

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Keeping personal and business details up to date

If a customer doesn't tell us about changes to their situation during the year, they may face an unforeseen tax bill or an over-payment of entitlements at the end of the tax year, or miss out on possible refunds or social policy payments. It's important that we are kept up to date about changes in circumstance so we can make the right adjustments.

Changes to family and individual circumstances

Working for Families Tax Credits (WfFTC) is based on the sources and amount of a family's annual income, and the number and age of dependent children. When a family's circumstances change during the year it can affect their entitlement. For example, their type of income changes, a new child may join their family, they reconcile with a partner, move overseas permanently or the last dependent child becomes financially independent. To avoid over or under- payments recipients need to tell us about changes straightaway. The easiest way to do this is to update their details using our secure online service.

We also need to know about changes to individual circumstances. If you move house, we need to know your new address. If a family member dies, we need to know so we can update our records and settle their tax affairs.

If you change your job or employer you may need to use a different tax code. Individuals who use the wrong tax code will have the wrong amount of tax deducted, either with their employer for salary and wages, with their bank for interest earned or for their student loan repayments.

Usually, people use the wrong tax code because they don't understand how to choose one or they've not reviewed it when their employment circumstances have changed. Using the wrong tax code could result in underpaying tax and facing a tax debt at the end of the year.

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DIY tax refunds

Changes to business or employment

If your business stops operating you need to notify us. You must file a final tax return that includes business accounts and any assets held up to the date the business ceased. The final tax return is due after the end of the financial year the business stopped operating. You can't file an early return.

You can cancel your GST registration if you cease all taxable activities, or if your turnover for the next 12 months will be less than $60,000. Your final GST return must include all assets retained.

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