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IRD wants to hear from employers

IRD wants to know what employers think of their proposals for correcting and adjusting PAYE filings.

This recently released officials’ paper sets out the background and proposals: http://taxpolicy.ird.govt.nz/publications/2017-ip-paye-error-correction/overview

A tax bill currently before Parliament will change how employers meet their PAYE reporting and payment obligations. The entire bill is here: http://taxpolicy.ird.govt.nz/bills/51-249. Employers will be able to use their payroll software to file their PAYE information directly. The objective is to reduce paper based compliance and make it easier for those who have payroll systems that support digital filing.

The officials’ paper on correcting payroll reporting errors follows on from the changes intended in the bill and deals with how calculation, transposition and interpretation errors would be corrected and adjustments made. Depending on the nature of the error the correction may be to the original reporting period or an adjustment could be made in a later reporting period. The officials have set out a number of options under different scenarios.

Getting PAYE right all the time is extremely difficult. There are many complex variables and the officials at IRD recognise this in the approach they’ve taken. Overall the proposals appear balanced and pragmatic. However, not all options will appeal to all employers and it’s important you have your say if you are concerned about the impact on you.

The proposals include clarifying what happens when an employee is mistakenly overpaid and does not repay the employer. There is some uncertainty whether the overpayment is actually income of the employee that should be subject to PAYE. IRD intends to make it clear PAYE remains payable on overpayments of salary and wages when the employee has not refunded the overpayment. This could be a contentious. It some cases it could seem as though the tax collector is benefitting from an error by the employer and the employer is bearing an added cost of their mistake solely because the employee refuses to repay the overpayment (and may even have become uncontactable). There will be lots of scenarios to consider and I’d be surprised if there weren’t some strong submissions on this point.

If you want to make a submission you have until 15 September. Don’t be shy now!

 

Iain

 

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New rules for property transactions

The Government has acted to require buyers and sellers of property to have IRD numbers. see http://taxpolicy.ird.govt.nz/news/2015-06-23-property-tax-rules-bill-introduced

The Taxation (Land Information and Offshore Persons Information) Bill was introduced into Parliament yesterday.

There are two main proposals:

1. Parties to real estate sale and purchase agreements will have to have an IRD number and supply that number to Land Information New Zealand. If one of the parties is a non-resident they will also have to provide the Tax Identification Number from the country where they are resident.

2. A non-resident applying for an IRD number in New Zealand will have to provide details of a New Zealand bank account.

There are exceptions of course, such as for the family home.

These changes are designed to help IRD enforce the land taxing provisions. They come ahead of the other big Budget 2015 measure proposing a bright line test to tax property bought and sold within two years. We’ll see more on that later this year.

In the meantime, when these measures are enacted IRD will have more ammunition to go after property traders and developers, whether for income tax or GST.

Iain

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Vat audits- the whole story

EY’s digitally interactive report on managing indirect tax disputes is definitely worth a read.

http://www.ey.com/indirectcontroversy

The report has a host of useful information about modern indirect tax audits, common errors and how smart businesses are managing their indirect taxes to stay clear of nasty surprises.
Iain

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