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Tax simplified for individual taxpayers

A new tax bill introduced to Parliament will mean automatic tax refunds for around 750,000 New Zealanders.

Revenue Minister Stuart Nash says the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill will simplify tax obligations for individuals who only earn employment or investment income. It will remove the need for them to file a personal tax summary (PTS) to get a tax refund.

“Filing a PTS is currently the only way for individuals to get a refund, but around 750,000 people don’t follow this process. They are missing out on their money as a result. We want people to get their refunds automatically”, Mr Nash says.

“The only reason to file a PTS in the future will be if a taxpayer has additional information they need to provide. If this is not the case, Inland Revenue will automatically work out the amount of the refund or the tax to pay.

“The legislation also amends the Tax Administration Act to clarify how Inland Revenue can collect, use and disclose taxpayer information. Inland Revenue follows good rules around the use of information but the changes will improve efficiency and clarity.

“The changes will better focus the confidentiality rule to clearly protect taxpayer information. It will clearly set out any exceptions. It strikes the right balance between careful treatment of taxpayers’ confidential information and improved customer service,” Mr Nash says.

In other measures, the legislation:

  • introduces a ‘short process ruling’ where small businesses can more easily apply for a binding ruling from Inland Revenue on any tax matter;
  • provides the Commissioner of Inland Revenue with more flexibility to deal with minor anomalies in tax legislation;
  • allows over-65 year olds to join KiwiSaver as a provider of low cost managed funds. Employers would not be obliged to contribute for over-65s but may do so voluntarily
  • adds new KiwiSaver contribution rates of 6% and 10%
  • improves the ability of taxpayers to fix errors in tax returns; and
  • sets the annual tax rates for the 2018-19 tax year, which remain unchanged from previous tax years.

“This Bill represents a significant step in the modernisation and simplification of New Zealand’s tax system, supporting much of Inland Revenue’s Business Transformation work,” Mr Nash says.

More information can be found at: taxpolicy.ird.govt.nz