We have lodged a complaint with the Commissioners office that IRD claims that tax may be overdue when it isnt, while simultaneously failing to record tax that is actually due.

In the meantime if a taxpayer underpays tax, whether deliberately, or in error, or even if they are tricked by IRD as above , IRD charges 8.35% and often late payment penalties on top.

Whereas if a taxpayer overpays their tax, IRD pays at best 0.81% per annum.

See: www.ird.govt.nz/topics/income-tax/interest-on-overpaid-and-underpaid-duties-and-tax

In respect of future tax obligations:

  • IRD encourages taxpayers to use myIR, including clients of tax agents
  • Information in myIR consistently claims that future provisional tax ‘may be incurring penalties and interest’ while failing to disclose other obligations imposed by legislation
  • This causes errors and unnecessary compliance costs

As IRD is well aware :

  1. For a 31 March balance date, clients of tax agents have until the following  31 March to file their tax return
  2. Where a tax return has been filed, provisional tax is based on that year’s residual income tax [RIT] plus 5%,
  3. When it hasn’t been filed provisional tax is based on the previous year’s RIT plus 10%
  4. such provisional tax is paid in three tranches

Under item 2 where tax is due in a future instalment above myIR incorrectly shows:

 “Your account is in debt. You may be charged late payment penalties and interest on overdue amount” 

This can lead to taxpayers inadvertently paying early and perhaps earning 0.81% per year

Ironically under item 3 IRD shows

 “There has been no financial activity” which can potentially lead to taxpayers missing a provisional tax payment and facing interest (currently 8.35% per year) and late payment penalties – 5% within 7 days and a further 1% per month thereafter

We asked:

  • Is IRD deliberately trying to secure  early payments on 2019 provisional tax
  • Why is IRD telling taxpayers they don’t owe legitimate tax, resulting in missing payments and thereby maximising penalties and interest
  • If this is not deliberate does the Commissioner accept that the myIR information is misleading
  • When is that information going to be corrected

The Commissioner’s office will only say

“the issue about how balances are displayed in myIR is with our system developers and they are currently working on fixing this problem. However, due to other priorities they have not been able to provide a timeframe for when a possible fix will be implemented”