750,000 automatic tax refunds for wage and salary earners

750,000 automatic tax refunds for wage and salary earners next year – the biggest tax change in 20 years

POSTED 03 AUGUST 2018

Inland Revenue (IR) expects that next year, about 750,000 tax refunds will be automatically generated for wage and salary earners who don’t usually apply to get their tax back.

Speaking to the Finance and Expenditure Select Committee (last Wednesday), Inland Revenue Commissioner Naomi Ferguson said that, subject to legislation before the committee being passed, this would be the biggest change to individual tax in nearly 20 years.

Ms Ferguson said it hasn’t been mandatory for wage and salary earners to fill out an IR personal tax summary (PTS) but if they had and it had indicated a refund, they could have filed a return and received that refund.

“In the new system all wage and salary earners’ tax will be calculated and refunds sent automatically,” she said. “About 110,000 more, who also haven’t been filing, will have an amount to pay – they'll be notified automatically.”

“Getting a refund, if you’re entitled to one, will be a whole lot simpler because it will be done for you,” she said. “The only reason for contacting IR now will be to tell us about any additional income information that we need to know.

“Put simply, IR will now look at the information we have about an individual and if we’re confident we have all their information, we’ll calculate and finalise their tax position for the year and generate an automatic refund - so there’s no need for a PTS, making it a very simple process for wage and salary earners.

“But it’s still a big change from what so many people have become used to.

“It will be very important that everyone has made sure the details we hold about them – bank account number, contact details and so on – are fully up to date so the new system works well for them. We’ll be communicating widely to make sure customers know what’s changing, when, and what they need to do,” she said.

Other changes that will come into effect from April 2019 include:

making it easier to manage income tax and Working for Families, which includes some changes to myIR for both businesses and individualsreporting of PAYE information every payday for employers – which is now voluntary – becomes compulsory, and more regular reporting of investment income information becomes voluntary – and then mandatory a year later.

ends

© Scoop Media