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Better Administration of PAYE and GST

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In the article Making Tax Simpler “Better Administration of PAYE and GST”, the Government have introduced new proposals to improve the tax systems in New Zealand. Such changes relates to PAYE and GST.

The most significant improvement they want to make is to “use modern digital technology to provide faster, more accurate and convenient interactions with Inland Revenue”. This means that they want to integrate PAYE and GST filling process into accounting software.

Proposal for PAYE

With the purpose to improve and make PAYE process easier, the government have proposed these changes:

  • Improving accounting software and integrating it to the filling process. Thus, taxpayer can fill their PAYE straight from their accounting software and they do not have to follow a separate filling process. Employers now can also communicate directly with the IRD from these accounting software.
  • By introducing the new way for filling, the government proposes that employer can now provide PAYE information to Inland Revenue at the time the business process occurs. This means that employer now can file the returns when the pay is calculated and they can make payment to employees and PAYE payment to IRD at the same time.
  • The Government also wants to reduce the electronic filling threshold for PAYE and employer superannuation contribution tax from $100,000 to $50,000. The lower threshold means that they would expect to reduce the number of taxpayers filling paper returns. 

 

Advantages

With the new proposals, taxpayer can file their PAYE returns straight from their accounting software. This means that employers do not have to go export PAYE information from their accounting software and import it to PAYE e-filling. It would save the taxpayers lots of time and effort as they can prepare the PAYE returns in their accounting software and fill it to the IRD straight from the software. The filling process would become easier and employer can reduce their compliance costs. 

By lowering the PAYE electronic filing thresholder from $100,000 to $50,000, more taxpayers will have to change their filling practice and go on electronic filling. It would help the IRD to reduce Inland Revenue’s costs to process the information, as they receive the online PAYE returns and less data-entry staff is required. It would also reduce the risk of manually enter data to the IRD system.

The government is also considering to increase the frequency of PAYE filling as the employers can  send PAYE and related deductions to the IRD at the same time they pay their employee. This will help the employers to be more informed about their PAYE position and better cash flows as they know the amounts to pay to put away available funds.

 

Disadvantages

There are some problems with the proposed changes. As they government propose for regular filling, it would be more likely to increase time and efforts and more compliance from the taxpayers. As the requirement for a regular filling (instead of filling monthly, employers have to do it fortnightly and weekly), employers need to spend time every week or fortnight to prepare for the returns. Although it is easier to file the returns through accounting software, employers still need to take appropriate steps to prepare and file the returns. If appropriate steps have not been made, there are high chances of error in the returns. Tax agent will likely to increase their costs if they have to do regular filling. Thus, regular filling will lead to an increase in time and money for taxpayer to prepare.

As the new threshold is introduced, the IRD should work on how to improve their internal system. Many taxpayers still have to submit paper returns find that it is quite difficult to register an account with the IRD. As the rules, only shareholder and director of the company can call IRD to confirm the company. However, these people with high ranking are often very busy and they do not have time to wait for hours on the phone waiting for reply. IRD should simplify the registration process so it is easier and faster for people to apply online.

 

Proposal for GST

  • The government also integrated business software into the GST filling process. Taxpayers can file their GST returns straight from the accounting software.
  • Proposed changes also suggest that GST refunds to be direct credited straight to a customer’s bank account. There is no need to send cheques to taxpayer for GST refunds.
  • Some considerations also make to see whether they should introduce a threshold for taxpayer to submit their GST returns electronically.

 

Consideration

  1. Integrating accounting software to the income tax filling process as well.
  2. Give more power to accounting Software Company. Will they increase their fees? Then taxpayer’s compliance cost still increases anyway.
  3. Improvement of IRD call centre facility and its internal system.
  4. Will it increase chances of taxpayer making mistakes? As filling tax returns become easier, they will do it themselves and make mistake. It will increase time and money to fix the taxpayer’s mistake.

 

Disclaimer

Information provided above is of general use only. If you intending to rely on above information consult us or seek professional advice. IBBZ Accounting or any of its employee is not responsible should the information above result in any kind of loss to you directly or indirectly. 

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Saurav Wadhwa is a Principal Accountant at IBBZ Accounting Limited


M Bus (TAX) PG Cert (LAW) CA CPA


Membership and Qualification:


- Masters in Professional Business Studies (Taxation) with Distinction from Auckland University of Technology


- Post Graduate Certificate in LAW, Law School at Auckland University of Technology


- Chartered Accountant(CA), New Zealand Institute of Chartered Accountants (NZICA)


- Certified Practicing Accountant(CPA), CPA Australia


- Bachelor of Commerce, Grad. Cert. in Business from Auckland University of Technology


Saurav Wadhwa


Saurav has many years of practical experience in tax & accounting services and is the co-founder of IBBZ Accounting Limited.  He is qualified both in law and accounting. Saurav has worked in various tax & accounting specialist roles for large corporates in New Zealand. He loves to work with Small Businesses.


His key focus is on:



  • Tax advisory for small and family operated businesses on a wide range of taxation issues.

  • Legitimate tax saving structures.

  • Advising on range of new business issues.

  • Ensuring business growth is attained.

  • Effective cash flow planning.


Saurav specialises in Tax Disputes resolution, Tax Relief applications, Tax Debt resolution/management, and representation in Tax Audit. Saurav can represent you in Taxation Review Authority,  in Tax Dispute Court Cases or he can represent you during Tax Audit Investigations.


Blend of skills in Tax laws and accounting, makes him perfect advisor for small businesses and individuals like you. Saurav understands how to safeguard your business from creditors risk, maximise the business growth and pay low taxes. He can be your good strategic and business partner. He is of a friendly nature and easily approachable.


Saurav understands the numbers very well. He is a qualified Chartered Accountant and registered with highest professional accounting bodies of Australia and New Zealand. He can help you to plan for the future to satisfy all your financial needs.



Consumed by a hunger for knowledge, Saurav has never stopped furthering his education or expanding his pool of knowledge. Nothing gives Saurav more satisfaction than assisting his clients to achieve their financial goals. His diligence, passion and accuracy has earned him a reputation as a reliable professional who strives to serve his clients above and beyond the call of his duties.



Saurav was nominated for the Best Accountant of the year and the Young Entrepreneur of the year, and his company IBBZ Accounting won the award of Best Small Business 2014. In 2015 Saurav won the award of Best Accountant of the Year.


In 2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia. 



Saurav is a dedicated family man. Saurav is very fond of outdoor activities and enjoys pretty much all outdoor activities: running, bike, motorbike, snorkel, fishing, skiing etc. Saurav, is also a self-confessed workaholic, spends some of his free time thinking about his client’s affairs and forecasting their financial future.


He can be contacted on saurav@ibbz.co.nz  or 09 272 8050

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Guest Sunday, 19 November 2017