Calculating income tax
Our vision for the future of income tax
Getting your income tax sorted may become easier soon. You can read about changes we are considering below and watch a short video to see what some changes may mean for busy business people like Rawinia.
It’s important to note that some of the examples below would require changes to legislation. The New Zealand Government has signalled that they are considering all these changes, and more. You can keep up to date on their proposals at www.makingtaxsimpler.ird.govt.nz (external link) .
Tax becomes a more seamless part of your business
Your accounting software would automatically import sales from online vendors and other income, like interest. That way, you’re more likely to pay the right amount of tax.
Your accounting software may allow you to easily reconcile with your bank account information. We may also notify you or prepopulate your tax return with income sources we know about. That way, you’ll save yourself getting into trouble later.
Since your accounting software could securely communicate with our systems, your income tax return may be generated automatically once you finish your annual accounts. You’d review it and submit it to us, direct from your accounting software. You’d get a confirmation from us straight away, giving you confidence. You may even be able set up a future payment at the same time.
Businesses without accounting software, but keen to work electronically, would still be able to use myIR Secure Online Services to manage their tax.
If you had a quick question, you could chat with an IR team member online, who could see exactly what you were looking at in your myIR Secure Online Service account as they spoke with you.
Payment plans made easy
If you get behind on your tax, you’d go to our website, set up a payment plan and get a confirmation straight away. Getting a plan sorted and out of debt sooner means less penalties and interest to pay.
Provisional tax improvements
The New Zealand Government is planning changes to provisional tax that would enable small businesses to pay their provisional tax as they earn income, rather than trying to estimate their income ahead of time. This would be integrated into your accounting software, which could calculate, file and pay your income tax with ease. For more information, you can view the Government’s Better Business Tax (external link) proposal.
We asked for your comments around the ideas we had and whether you thought they could work for you. Check out a summary of the feedback.
Thanks to everyone who took the time to share their thoughts.
Check out what these changes may mean for busy people like Rawinia.
What happens now
If you earn income from a variety of sources, there’s a chance you could miss out some income or make a mistake tallying your income for your annual tax return.
Not declaring all your income can be serious. Penalties and interest can add up fast.
Filing your income tax return online involves several steps. But only the sections you need to fill out will appear as you work through your return online. Filing paper returns is more time-consuming. Often you’ll need to follow a 50+ page guide to figure out exactly what sections you need to fill out.
Either way, you need to sort your income information in your business records. Then transfer this information to your tax return. Transferring numbers over to your return introduces the possibility of making a mistake. And fixing errors can be time consuming.
If you have trouble paying your tax, you can often set up a payment plan, but approval can take time.
Some main ways to get answers to your questions can also take a bit of time. If you call us when lots of other folks do, you’ll wait on hold to talk to one of us. If you have a myIR Secure Online Services account, you can send us a secure email. It can take up to 15 working days for a reply, although we respond to most emails in around five working days.
Government’s policy consultation
Making Tax Simpler
Government is conducting a separate series of policy consultations on detailed proposals to make tax simpler.
You can find out about these on Government’s Making Tax Simpler (external link) website.
You might also want to find out more about this website.