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AGENTSanswers - 2003

Issue 49 September 2003

Tax in the screen production industry
Reducing business tax compliance costs
CD Rom questionnaire
Removing clients from your client list
ACC and SEA
Transferring rebate claims
Availability of L Letters
Do you have clients who receive income-tested NZ Super?
Reminder - new registration forms
Updated publications
Escalation process for tax agents
Agent's dedicated fax line

Tax in the screen production industry

Inland Revenue has been working closely with the screen production industry to assist those involved in the production of film, television or video to meet their tax obligations. As a result we have introduced a number of initiatives.

Web-based guide for people in the screen production industry
This provides information about labour-related tax issues in the screen production industry. Over time the guide will be expanded to include information on other tax matters that affect the industry.

New withholding payment class
Industry feedback has indicated that most contractors prefer to have deductions made at source to avoid a large tax bill at year end. As a result of this feedback a new class of payments has been added to the withholding tax regulations to simplify and clarify the tax treatment for contractors working in the screen production industry. The new class comes into effect on 8 September 2003.

This means all resident contractors working in the screen production industry who are covered by the new class (generally those contractors who work behind the camera, eg lighting technicians, hairdressers, payroll and administrative staff) will be subject to 20% withholding tax deduction on payments they receive for services related to screen productions. (This rate is aligned to the existing withholding tax rate that applies to actors.) The no-declaration rate is 35%.

Any contractors who would like a higher or lower rate of deduction can still apply for a special tax code or a certificate of exemption.

Per diem (per day) allowances
Per diem allowances paid to resident and non-resident contractors and entertainers working in the screen production industry in New Zealand form part of their gross income and are subject to withholding tax.

However, a recently released determination (effective from 1 September 2003) allows per diems of up to $60 per day to be paid free of withholding tax and income tax record keeping obligations.

You can find out more about this on our web-based screen production industry guide or in the Tax Information Bulletin, Vol 15, No 8 (August 2003). You can find this under the Newsletters and Bulletins section of our website.

Screen production industry desk
We have established a screen production industry desk within our Corporates sector to consult with the industry, develop an understanding of the industry within Inland Revenue and to provide information about tax in the industry that is clear, consistent and easily understood.

Reducing business tax compliance costs

The Government will soon release a discussion document proposing changes to the tax rules. The changes are intended to reduce business tax compliance costs and include:

a subsidy for small businesses that use a tax agent for payroll management and associated tax obligations
aligning the payment dates of provisional tax and GST
a new way to calculate provisional tax.

When the discussion document is released, a summary of it and an electronic feedback form will be easily accessed from the Inland Revenue homepage and a full version of the document will be available on our policy website.

You will also be able to request a six-page summary from INFOexpress on 0800 257 477. Information about the discussion document is also being included in the September issues of Payroll News and GST News to encourage businesses to give feedback on the proposals, so you may be asked about it by your clients.

We are very interested in tax agent feedback to the proposals and hope to arrange local meetings in October to discuss these matters with you personally. We will keep you informed as we progress.

CD Rom questionnaire

We are about to start the development of version 6 of the Tax Agents' CD Rom. To ensure that we have a product that is helpful and provides the correct information for tax agents, it is vital that we receive feedback from you.

Included with this issue of AGENTSanswers, available under the Newsletters and Bulletins section of our website, is a short questionnaire. We ask that you complete it and send it back to us (postage is prepaid) by the end of September.

Remember that this is your product and to improve it we need your feedback!

Removing clients from your client list

In the August issue of AGENTSanswers we published an article setting out three steps to follow when ceasing a client and removing them from your client list. You can find this under the Newsletters and Bulletins section of our website.

The article discussed instances where a client will have no further ongoing tax obligations. Examples are where an individual permanently leaves New Zealand or dies, a company is struck off or a partnership is dissolved. We have been asked to expand on what will be shown on your client list (AMBR 1000) in these cases.

The previous article indicated that "C" for "Ceased" would appear beside the client's name. However, while a ceased tax account is given a "C" status in our system, the status shown beside the name on your client list may differ.

Client's current situation
We are not always aware of a client's current circumstances, for example, if a company has been struck off or a client has died. You can tell what status we have recorded for a client by checking your client list. The tables below explain the different status codes that may appear on your client list.

If our records are not up-to-date, you can let us know by phoning the tax agents' helpline.

The tax accounts for clients with the following statuses will be closed once all their tax affairs have been finalised
"C" after the client's name	Client is ceased (eg when a client has left New Zealand permanently or a partnership has been dissolved)
"M" after the client's name	Client is an amalgamated company
"S" after the client's name	Client has been struck off
Client's name preceded by "Official Assignee in Bankruptcy of..."	Client is bankrupt (this applies to the IRD number used up to the date of bankruptcy)
Client's name preceded by "Administrator in the estate of..."	Client is deceased

The tax accounts for clients with the following statuses will remain open as they will have ongoing tax obligations
"L" after the client's name	Client is in liquidation
"R" after the client's name	Client is in receivership

Returns required
Where a client has no further ongoing tax obligations, we will check that all returns required have been filed and processed. We will also check that all accounts are clear, for example, if there is overpaid tax that needs to be refunded.

You can check that any future returns have been recorded as "Not required" on your client list. An "N" will be showing in the "Return required" column. If there isn't, phone us on the tax agents' helpline to let us know the client does not have to file a return.

Once all the client's affairs have been finalised, we will close their tax records.

Delink the client
To remove a ceased client from your client list you need to delink them.

Once all of your client's tax affairs have been finalised, you can delink the client through INFOexpress, by phoning the tax agents' helpline or by sending us a Client linking or delinking (IR795) form. You can find this under the Forms and Guides section of our website.

The delinking of the client will appear on your weekly activity report (AMBR 1006) and their details will no longer appear on your client list.

Please contact your agent account manager if you have further questions about updating your client list.

ACC and SEA

Inland Revenue has now completely ceased all ACC activities.

We ceased processing payments for ACC and SEA from the end of July and all remaining ACC and SEA debt has now been written off.

If you file late returns for 2001 and earlier years, we will not bill your client for SEA levies nor will information be passed to ACC for them to bill your client.

If there is any activity that changes the earnings on which levies are calculated and this results in a refund of SEA, we will arrange for ACC to make a manual refund. For employer ACC refunds, you or your client should contact ACC directly.

For the 2002 and subsequent years, income tax reassessments arising from changes to earnings in the relevant key points (KP) on the IR 3 return will result in information being passed to ACC for them to issue an amended invoice. The relevant key points in the Individual tax return (IR3) are:

KP 12B Withholding payments

KP 17B Partnership income (should be active income only)

KP 22 Self-employed income

KP 25 Expenses

You can no longer link a client for ACC or SEA and all clients have been delinked for these tax types - they should no longer appear on your client list.

The following forms have been updated to remove the ACC and SEA tax types:

Existing client changes (IR793)
Ceasing a client's tax type (IR794)
Client linking or delinking (IR795)
Tax agents' request form (IR796).

Transferring rebate claims

If you would like a credit from a rebate claim to be transferred to an amount owing from an income tax return or if you would like a credit from a rebate claim released with an income tax refund, please complete the transfer details on the Claim for Personal Tax Rebate (IR526).

If the income tax return is processed before the rebate claim form, the notice of assessment and any statement for the return may be issued before the credit is transferred. We suggest you attach correspondence to your income tax return indicating there is a credit to be transferred - then the notice and statement will be held until the transfer has been done.

Availability of L letters

The L letter facility was introduced to assist tax agents in encouraging their clients to provide their records so that their income tax returns can be prepared and filed by 31 March each year.

Currently a L letter can be issued for a client right up to 31 March. However, there must be a point when there will not be enough time to complete a client's return before it is due, even if they do provide their records.

Recognising this, we intend to turn off the L letters from the end of January each year, beginning in January 2004, and make them available again in early August.

You may want to consider having L letters issued in October or November to any clients who have not yet provided their records. (Remember that by issuing an L letter, the client is removed from your performance statistics until the return is filed.)

Do you have clients who receive income-tested NZ Super?

NZ Super is likely to be income-tested if one person is over the qualifying age for NZ Super, but their partner is not. If the couple receives no other income (or very little other income), Work and Income will pay the NZ Super at the married rate.

When you request or confirm a PTS for any of your clients receiving NZ Super, we need to know if their NZ Super is income-tested or not, as this affects the way the under $38,000 rebate is calculated.

If you aren't certain whether your client's NZ Super is income-tested or not, please ask your client. They may need to check with Work and Income if they are unsure.

Reminder - new registration forms

In July we let you know about the updated GST registration (IR360) and Employer registration (IR334), and the new Taxpayer registration (IR56) taxpayer (IR359) registration form.

We are still receiving a lot of the previous versions of the registration forms. If you have stocks of the old forms, please dispose of them and order a supply of the updated forms through StationeryXpress or by phoning INFOxpress on 0800 257 773.

Alternatively, why not try the online registration forms? As well as being able to register your client for GST or as an employer, you can link them to your agency at the same time.

We are also looking at introducing an online form in the near future that allows users to register for more than one tax type at the same time.

Updated publications

The following publications have recently been updated and are available under the Forms and Guide section of our website or they can be ordered through StationeryXpress or by phoning INFOexpress on 0800 257 773.

Refund application - people leaving New Zealand (IR50)
For people leaving New Zealand for more than 325 days and wanting an urgent refund.
Gift statement (IR196)
This form must be completed when a donor gifts more than $12,000 in any 12-month period.
Dairy farming (IR252)
A guide to GST and PAYE for dairy farmers.
Rental income (IR264)
Explains tax rules for people who own rental property.
This booklet is more for people who own one or two rental properties, rather than larger property investors.
RWT on interest-payer's guide (IR283)
Information about RWT for people and organisations who pay interest.
ir-File - electronic filing for employers: Smart business quick reference summary sheet (IR317)
Explains how to register for and use ir-File.
Making payments (IR584)
Explains different payments methods, including how to fill in Inland Revenue's various payment forms.

Escalation process for tax agents

In most cases, issues you may have with Inland Revenue can be successfully resolved through contact with one of our staff members or customer service representatives. However, in some cases you still may not be satisfied with the service you have received. For example, if there has been an excessive delay in replying to a letter from you or you think a reply is incorrect.

If an issue cannot be successfully resolved through contact with staff, you should then contact your agent account manager. They will follow up the complaint and organise to have the issue resolved on your behalf.

Where you are still not satisfied that we have correctly dealt with your complaint, you can contact the agent account manager's team leader, their area manager or service centre manager. Beyond this, we have a Complaints Management Service, which can take a fresh look at your complaint.

Agents' dedicated fax line

Inland Revenue offers tax agents a 24-hour turnaround service for faxed IRD number applications and tax type registrations.

Lately we've noticed some agents are using this service for other requests. This slows down our ability to respond to you as quickly as we'd like and it may also make it more difficult for you to get through on our fax line. Please limit your fax requests to IRD number applications and tax type registrations, the facilities for which the fax service was designed.

When faxing an IRD number application or a tax type registration, please make sure they're signed and that only the required documentation is faxed through. For required documentation, see below.

For IRD number applications

Individuals - proof of identity. This can be a copy of a birth certificate, a passport (showing the photo and passport number), a New Zealand photo driver's licence or a certificate of New Zealand citizenship.
Trusts - the pages of the trust deed that show the name of the trust, the date it was formed and the trustees' signature(s).
Estates - the trustees' name(s) and IRD number(s) and proof of the date of death.
Companies - a certificate of incorporation or a copy of the Companies Office abstract.
Partnerships - the partners' full details including their IRD numbers.
Incorporated society - the certificate of incorporation.
Unincorporated societies - the executive office holders' names and IRD numbers.
Clubs, societies, and non-profit bodies - the executive office holders' names and IRD numbers.

For registrations
All registrations need to be completed in full, including address details and start dates.