Taxpayers need more info on impending tax transformation

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Till 3.50pm Thursday 17 November 2016

[At 3.50pm today Tax Management NZ Chief Executive Chris Cunniffe will speak at the NZ Tax Conference in Auckland on the survey’s findings.]

Taxpayers need more information on impending tax transformation - Chartered Accountants’ survey

Chartered Accountants believe Kiwi taxpayers need more information about Inland Revenue’s upcoming transformation of the way tax is paid.

The annual survey of Chartered Accountants’ satisfaction with Inland Revenue (IR), out today, also reveals concerns about increased use of technology to provide real-time tax information to IR.

The IR Satisfaction Survey, commissioned by Chartered Accountants Australia and New Zealand and Tax Management NZ, this year asked Chartered Accountants (CAs) in public practice and corporates for their views on IR’s new tax administration system – called Business Transformation – along with some of the business tax changes currently before Parliament.

Nearly seven in 10 public practice CAs surveyed have doubts about taxpayers’ readiness for Business Transformation, says Chartered Accountants ANZ New Zealand Tax Leader Peter Vial.

“These views are from the coal face of the tax system as many CAs in public practice work with small and medium-sized businesses.”

Respondents also raised concerns about providing real-time information to IR and taxpayers’ financial systems ‘talking’ directly to IR’s systems. They are worried about how accurately taxpayers will input information and their lack of access to compatible technology.

Chartered Accountants in both public practice and corporates want more information about Business Transformation from IR.

“The demand for more information is consistent with respondents’ concerns about taxpayers’ readiness for the new tax administration system,” says Mr Vial.

“IR needs to provide more information on how it is transforming the tax administration system and communicate more effectively about the implications for taxpayers. This will ensure a smoother transition to the new system.”

Business Transformation aims to simplify and streamline IR’s business processes, policies and customer services as well as upgrade its technology. Changes will be introduced incrementally from next year.

The survey also asked Chartered Accountants ANZ members about the new provisional tax calculation method, the accounting income method (AIM); awareness of upcoming changes to withholding tax; and the level of comfort with IR being able to share information more widely.

Tax Management NZ Chief Executive Chris Cunniffe says more may be required to encourage uptake of AIM after less than 50 per cent of respondents indicated they would use the method when it comes into effect on 1 April 2018.

Under AIM, taxpayers with turnover of less than $5 million, and who use IR-approved accounting software, will be able to pay provisional tax every two months based on profit for that period. No use of money interest will be charged if payment is made on time.

“While most Chartered Accountants agreed that AIM would provide certainty around provisional tax, they are less certain that it will reduce compliance costs,” says Mr Cunniffe.

Mr Vial says there is little awareness so far about the changes to withholding tax and IR being able to share information more widely with credit agencies and the Companies Office. But with those changes coming into effect from next April, he feels there is time for IR to “embark on an intensive education campaign” to explain the new rules.

In terms of overall satisfaction, the number of CAs who have had a positive experience when dealing with IR in the last 12 months has increased by 2 per cent. However, this has been offset by a 2 per cent increase in those who have had a less than positive experience.

As was the case last year, respondents would like IR to improve the consistency of information provided by its call centre staff and the ease of finding the right person to talk to about a technical issue.

The areas of audit and processing showed significant improvement.

IR’s auditors are responding more promptly to issues and considering more fairly issues raised by taxpayers, while digitalisation of the tax administration system has resulted in more accurate processing and fewer errors, says Mr Vial.

Notes

The IR Satisfaction Survey was conducted by Colmar Brunton between 4 and 24 October.

It has a margin of error of plus or minus 4.5 percent.

Chartered Accountants ANZ has shared these results with IR.

About Chartered Accountants Australia and New Zealand

Chartered Accountants Australia and New Zealand is a professional body comprised of over 117,000 diverse, talented and financially astute members, including 30,000 in New Zealand, who utilise their skills every day to make a difference for businesses the world over.

Members are known for their professional integrity, principled judgment, financial discipline and a forward-looking approach to business which contributes to the prosperity of our nations.

About Tax Management NZ

Tax Management NZ’s mission is to create a better tax environment. As New Zealand’s first and largest tax pooling intermediary, we have worked alongside many of New Zealand’s top 200 companies, state-owned enterprises, fund managers, major banks and thousands of small and medium sized businesses to better manage their provisional tax obligations and mitigate their exposure to IRD interest.

ENDS

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