Wednesday, July 24, 2013

2013 tax summaries and summary of earnings

From Monday 15 July, we will start to progressively send 2013 summary of earnings or personal tax summaries to customers who may have been paid incorrectly through Novopay. If you have a myIR Secure Online Services account, you may also be able to view your 2013 details like your income, Working for Families and student loan details.

If you believe you have been paid incorrectly through Novopay, this may affect the income and deduction details showing on your summary of earnings or personal tax summary for the 2013 tax year.

We rely on the income information details we receive from your employer to calculate your entitlements or obligations. Unless we hear otherwise, the income and deduction details we currently hold will be used to calculate your entitlements and/or payment obligations for:

Income tax refund or bill
Working for Families Tax Credits
Child support
Student loans
If you think your income details on our records are incorrect based on the notice/statement you receive from us, please contact your school payroll administrator in the first instance to work out if any changes are required. If you had an overpayment, you need to resolve this matter with the Ministry of Education.

Once your income details are correct, we will be advised by the Ministry of Education so we can make any adjustments on your Inland Revenue records.

If you have filed a return, or confirmed your PTS, and adjustments are subsequently made to your income and deduction details, this may result in increased entitlements or tax obligations depending on your personal circumstance. We'll work with you to resolve any under or over-assessed amount.

You can contact us if you have specific questions about your entitlements or obligations, or have difficulty meeting your obligations.

2013 income details unavailable on myIR Secure Online Services

If you or your partner are affected by Novopay and have a myIR Secure Online Services account, some of your Inland Revenue-related details may not be available on myIR until 31 July 2013 while we reconcile your account. This may include your 2013 income details as well as your Working for Families and/or student loan details. We've taken this step while we await further information from your employer.

There is no need to contact us about your 2013 income and other Inland Revenue-related details at this stage. Once we've reconciled your account, we'll be in touch and will reissue your summary of earnings or personal tax summary if required.

Novopay phone line for affected customers

To better address the queries of customers affected by Novopay, we are tailoring our Novopay phone service to focus on those whom we already know have issues resulting from the Novopay payroll system.

Using information provided by the Ministry of Education, we have a way to recognise incoming calls from customers affected by Novopay through their IRD number or phone number. This means these customers don't need to do anything different. They will still be able to speak with a member of our specialist team who can assist them with their query.

IS 13/01: Tax Avoidance and the interpretation of sections BG 1 and GA 1 of the Income Tax Act 2007 has been finalised and issued by the Office of the Chief Tax Counsel.

This interpretation statement outlines the Commissioner's view of the law on tax avoidance in New Zealand. It sets out the Commissioner's view of the principles to be applied and provides a framework within which those principles will be applied. The Commissioner applies the approach to sections BG 1 and GA 1 established by the Supreme Court in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115 and subsequently confirmed in all relevant judicial decisions. The statement discusses various legal issues that may arise. Flow charts and examples illustrating how the approach is worked through are included in the statement.

This statement replaces the Commissioner's statement on section 99 of the Income Tax Act 1976 (Appendix C to the Tax Information Bulletin, Vol 1, No 8, February 1990).

This item will be published in the August Tax Information Bulletin.

Government has announced changes as part of Budget 2013. Once they become law, the changes will be implemented by Inland Revenue over the next few years:

Tax changes

"Black hole" expenditure

Some business costs are currently not able to be offset against income for tax purposes. The proposal announced as part of Budget 2013 is to change this for specific forms of business expenditure. Proposals will be included in a bill later this year.

Cashing out tax losses for R&D intensive start-up firms

The Government is concerned that small, innovative businesses face a financial disadvantage when investing in research and development. A consultation document discussing this issue will be released in the next few months.

Reviewing the effectiveness of the thin capitalisation rules

An issues paper was released at the beginning of this year on this topic. The thin capitalisation rules form part of our international tax rules aimed at ensuring that everyone pays their fair share of tax. Changes will be included in a tax bill to be introduced later this year.

Clarifying when land is acquired

As part of Budget 2013 announcements, the Government released an issues paper which seeks to clarify the date of acquisition of land that is acquired with the intention or purpose of disposal.

For more information go to our Policy Advice Division website

Student loans

The student support changes announced in Budget 2013 focus on improving repayments from overseas-based borrowers and increasing personal responsibility for debt.

Information matching with Department of Internal Affairs

This will allow the Department of Internal Affairs to share contact details from adult passport applications and renewals with Inland Revenue. The details will be matched against Inland Revenue's database of overseas-based borrowers in default, for student loans, and liable parents in default, or whose contact details are out of date, for child support. This will enable Inland Revenue to get in touch with individuals to confirm their correct contact details and discuss their outstanding arrears. This will be implemented once the relevant regulations have been approved later in 2013.

Adjusting the overseas-based repayment regime

Adjustments will be made to the overseas-based borrower repayment regime by introducing a fixed repayment obligation threshold and adding two more steps to the current overseas-based repayment regime, so borrowers with higher loan balances have a higher repayment obligation. This will be included in a bill later this year.

Introducing the ability to arrest non-compliant borrowers who are about to leave New Zealand

Making it a criminal offence to knowingly default on an overseas-based repayment obligation will allow Inland Revenue to request an arrest warrant to prevent the most non-compliant borrowers from leaving New Zealand. Similar provisions already exist under the Child Support Act. This will be included in a bill later this year.

Changes to the calculation of the cost of lending in the Student Loan Scheme

The cost of lending in the Student Loan Scheme is now calculated using annual interest rate data applicable from the year the borrowing occurs. The new approach came into effect from 1 January 2013. Previously, the cost of lending was calculated for each borrower, based on the interest rate in the year the borrower first entered the scheme, even if they draw from the scheme in subsequent years. The change will increase the accuracy of the scheme and provide Government with better information on the cost of lending.
Sunday, June 30, 2013
New Zealand Inland Revenue Department, published on taxes and specific social policy and services