A Week in Review
IR Modernisation sees further changes from 1 April
Most of you will be aware of IR’s change of system, from FIRST to START around this time last year. START has brought with it many new bells and whistles, both for the benefit of IR and the taxpayer alike.
April 1st this year will see the commencement of further system ‘enhancements’, including:
- Student Loans – via myIR, lenders will be able to see a clearer view of their total student loan balance and repayments made, obtain a breakdown of any assessment, including amounts due and due dates, see their departure and arrival dates if they travel overseas, and use new calculators to work out how long it will take to repay their student loan or when interest will be charged when they go overseas;
- KiwiSaver – members having better visibility of deductions and contributions to myIR, having more self-service options in their KiwiSaver account, being provided with more information to determine their correct PIR rate on Inland Revenue’s website, and having their employer contributions invested sooner. On the other side of the coin, employers will receive new notifications specific to KiwiSaver contribution rates and enrolments, and they will see improvements to the on-boarding process for new employees;
- Investment Income – mandatory payday reporting by payers of investment income commences on the 1st (payers of interest, dividends, royalties in the main) – find out more here – https://www.classic.ird.govt.nz/campaigns/2020/investment-income-changes/. This change will naturally increase the level of ‘reportable income’ that IR receives for your clients, and ultimately may result in the person not having to do anything further post year end, if it is apparent that IR already has the complete picture of their income position for the relevant income year; and,
- Income Equalisation Schemes – eligible taxpayers able to tell IR about deposits/request withdrawals for income equalisation in myIR (no more paper forms), the ability to make deposits electronically in myIR or via internet banking (new account code: EQU — Income Equalisation for internet banking), being able to see scheme balances and other transactions, such as interest, at any time in myIR under the new accounts (Income Equalisation), and having deposits and withdrawals shown in the taxpayers income summary and pre-populated into the ‘other income’ field on their income tax returns in myIR.
IR annual shutdown dates announced
Coinciding again with this year’s Easter holiday weekend break, IR will be closing its doors from 3pm on April 9th to 8am on Thursday April 16th, as Release 4 to its transformation process is implemented, bringing further changes to the IR START system, most of which were outlined above.
Unavailable during this time will be IR phone lines and offices, and access to myIR or E-file.
Post the break, all IR products (if you can refer to them as such?) will be available in START, with the exception of child support and paid parental leave. Release 5 planned for April 2021 will include the changes and improvements to the child support regime.
SOP introduced
A Supplementary Order Paper (SOP) has been introduced into Parliament, proposing a number of remedial and technical amendments to the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill, which is presently making its way through the House (presently at second reading stage).
While the SOP does include several other minor legislative amendments, the main focus of the paper is to address the Court of Appeal’s decision in IR v Roberts (2019) 29 NZTC ¶24-026, [2019] NZCA 654, which found in favour of the taxpayer that a debt forgiveness could amount to an available donation credit for the creditor.
A proposed amendment to s. LD 3 of the Income Tax Act 2007, will confirm that donation tax credits and gift deductions will not be available for gifts to donee organisations where they are made by way of debt forgiveness. The amendment will ensure that the original policy intent that donation tax credits and gift deductions were limited to gifts of cash or cash equivalents such as payments made by bank transfers, credit card or cheques will be satisfied.
The proposed amendment will apply retrospectively from 1 April 2008 but a savings provision will apply to taxpayers who have already taken a position in reliance on the current legislation and filed a return or donation tax credit claim before 17 December 2019, the date of the announcement by the Minister.