From the 2020 year, we’ve made the following changes to income tax assessments and returns.
- We will not automatically issue income tax assessments for clients of tax agents.
- Unless a client is already an Individual income tax return - IR3 filer, we’ll issue an Income tax - more information request which needs to be finalised.
- You'll have until 31 March to finalise assessments for your clients (if you have an extension of time to file).
If you have clients who need their income tax or Working for Families assessment, or both, to be finalised promptly, you will need to do one of the following.
- Proactively finalise the income tax assessment by - confirming the pre-populated information or providing more information if appropriate.
- Encourage your client to finalise their income tax assessment themselves in myIR.
- Delink the client prior to us issuing the more information request so that we deal with the client directly.
If your clients contact us, we will:
- direct any queries about the income tax process to you as their tax agent
- delink them if requested and ask the client to let you know.
You must not relink the client without a new authority to act.
An on-demand webinar is available to help you through the process of reviewing and finalising assessments.
Below are some of the most common questions we’re receiving from tax agents. Hopefully they help make the process little clearer.
At the end of the tax year
After the end of each tax year, we'll send you or your clients either an:
- Income tax - more information request letter (includes schedular income, working for families and nil income clients)
- Individual income tax return - IR3 in myIR, or a paper copy by post.
To identify what we think a customer needs to do at the end of the tax year, we use multiple data and reference points. These include the active income types in their income profile. You can keep these income types updated as their circumstances change throughout the year.
From your client list report, you can find out more about your clients’ obligations for income tax returns. The individual filing group will display an individual's filing expectation.
- Auto issued - more info (includes Working for Families, schedular income and nil income clients)
- Return filer (IR3).
A client will only show 'Auto Assessed' or 'No assessment required' if they are linked to a tax agent after the grouping evaluation has been run.
Issuing of the Income tax - more information request
From mid-May we will start issuing more information request letters until the end of July.
- Working for Families customers and their partner(s) will also be issued from the end of May.
- A wash-up for any remaining Income tax - more information request letters will be issued at the end of July.
If your client mail is being redirected for income tax, this letter will be sent to you. Otherwise, it will go directly to your client.
We are sending the letters in stages so you will not get them all at once.
Income tax - more information request
All linked clients of a tax agent who receive ‘reportable income’ will receive an ‘Income tax – more information request’ (not IR3 filers). This will include those clients that receive schedular payments and those with nil income in their income profile.
Reportable income includes:
- salary and wages (or other PAYE income)
- schedular payments
- investment income, such as interest, dividends, or Māori authority distributions
- employee share scheme benefits
- income from portfolio investment entities (PIEs).
The reportable income provided to us from a third party will pre-populate into the more information request notice.
You or your client must review this information, adding in any additional income and expenses, if appropriate, and finalise the assessment. You'll need to finalise within the required timeframe, which is:
- 31 March if the client has an extension of time
- 45 days after the date of issue if no extension of time.
The letter and the 'Unfiled returns report' will confirm the date it needs to be finalised by.
If we do not hear from you within the set timeframe, we’ll assume the information is correct and release the income tax assessment.
Once finalised, you will receive an income tax assessment notice.
Linking and delinking timeframes
Once an Income tax - more information request letter is issued, we cannot change the finalise-by date. The letter and the 'Unfiled returns report' will confirm the date this is to be reviewed and finalised by. If you:
- link after this has been issued, you will have 45 days from the date of the letter to finalise
- delink after this has been issued, your client will have until 31 March to finalise.
If you delink after the letter has been issued, you should tell your client to finalise their assessment or it will be held till 31 March.
Working for Families assessments
We will issue more information requests for these clients from May.
You may need to prioritise clients who rely on their Working for Families assessment each year and finalise this promptly.
The entitlement is dependent on family income - the end of year square-up cannot be completed until the income tax assessment(s) have been completed (including any associated partner assessments).
The Working for Families Tax Credits section of the client list report identifies clients who are registered either as:
- the principal child carer
- a partner
- an ex-partner.
Incorrect filing expectations
Income tax - more information request now an IR3 filer
You can manage this in myIR - when reviewing and finalising the more information request you can indicate that your client has received other income. The income type indicated will open for you to add in the additional income.
If you file using accounting software you can use the 'file' option if the customer has a pending income tax - more information request or 'amend' option if the income tax - more information request has already been finalised to file an IR3. If you're not sure what option is available in your software, please contact your software provider.
More information is found under 'Altering and finalising an income tax - more information request' below.
To ensure your client receives an IR3 return for the following year, you should add the other income sources in myIR. To do this, go to the 'Summary' tab in your client’s income tax account and:
- select 'Manage' in the ‘Current income types' heading
- add the other income sources.
IR3 Income tax return filer and now only has reportable income
You can still file the IR3 electronically. If filing in myIR, you’ll need to record that income type as $0.00.
After the return has been filed, in myIR go to the 'Summary' tab in your client’s Income tax account, select 'Manage' in the 'Current income types' heading and add a cease date to the other income sources, this will stop the client being selected for an IR3 the following year.
If your client qualifies for any of the write offs only available to qualifying individual (not IR3 filers), you will need to contact us to have this years' assessment changed.
Altering and finalising an Income tax - more information request
You can update details in myIR and through the new gateway income tax service. The new returns service (gateway services) will allow you to alter or confirm a more information request through software.
If you need to file an IR3 individual income tax return for a customer who already has a pending Income tax - more information request, you can send this through the income tax return service in your software – these will no longer require the same manual intervention that E-File did. We will replace the pending assessment with the IR3. You should only do this when you have non-reportable income to add (for example rent or self-employed income), otherwise you should just finalise the existing assessment.
Where a client has an automatically issued income tax assessment that has been finalised already, you will need to make an 'amend' to the assessment, regardless of the income type (eg. interest/rent) you’re changing. Where 'amend' is not used, it cannot be submitted - you will receive an error message advising of a duplicate assessment. In this instance you will need to amend the assessment using myIR.
If you are trying to finalise a clients Income tax - more information request, then your software needs to have 'CALC' functionality built. This will then allow amending and confirming for reportable income. If you don't have 'CALC' available in your software, you will need to use myIR to finalise the assessment.
If you're unsure if your software has 'amend' or ‘CALC’ functionality, you need to talk to your software provider.
Updates and amendments
If you need to amend assessments for clients who only have reportable income you can update their income tax assessment details in myIR. If this is done before the terminal tax due date, your client will receive a new assessment and will not be charged penalties or interest. Your client will have until the terminal tax due date to repay any refund they received as a result of the original assessment, without being charged any penalties or interest.
Please ensure all client contact details are kept up to date, you can manage this in myIR.
To ensure faster processing please keep client bank account details up to date. This can be managed in myIR or when you are filing their income tax return. Alternatively, you can use the refund redirect option if you hold written authority to receive client refunds and operate a disbursement account.
If you want to set up a disbursement account to receive client refunds, please contact your account manager.
You are not to add your own agency bank account to the client’s account.
To add a client’s bank account in myIR
Use the 'Update a refund bank account' service in myIR to add a bank account for your client. You'll find this in by going into the 'More' menu in the client's income tax tile.
If you are unable to see the 'Update a refund bank account' link, please contact your agency administrator to update your access permissions. You need to have 'Full account' access to add or edit a refund bank account.
To redirect client refunds
To redirect refunds for an existing client, go to the 'Delink or manage links' section in myIR. Under the refund options select 'Client' and this will change to 'Tax agent'. Submit your changes. For new clients, select 'Refunds to tax agent' in the redirect section when linking.
From 1 April 2020, there are changes to how investment income is reported to us. We will receive information in more detail and more frequently. You will have more regular visibility of investment income in myIR.
For the 2020 year, investment income will be visible in your client's myIR account once the payer of the income has filed. Income from portfolio investment entities will be visible from 15 May.
We will split any investment income reported for a joint account equally across all account holders, who have provided a valid IRD number to the payer.
If the joint allocation is incorrect, you can manage this in myIR by typing over the pre-populated income with the correct information. This update is only for the current year and does not hold for future use.
In myIR, you can also update investment income percentages for future years. To do this, go to the 'Summary' tab in your client’s income tax account, select 'View details' in the 'Earning summary' and select 'Update investment percentage'.
The percentage split will then remain until it is updated again by you or your client.
The update will only be made to the individual’s ownership percentage. Other account holders will need to update their details separately.
When PIE income is included
For the 2021 tax year onwards, income from a portfolio investment entity (PIE) is included in the:
- income displayed in myIR
- summary of income
- automatic income tax assessment or individual income tax return - IR3.