May is the month where the farming seasons wind down - cows are being dried off and excess stock is sold before winter, while sharemilkers and contract milkers that are moving farms prepare for gypsy day around the last weekend of May. For accountants the new tax and reporting season is now underway and it has been a busy time getting to grips with the new IRD computer system, along with payday filing and other changes that have been taking place.
IRD Computer System Upgrade
The Inland Revenue Department closed its call centre and online presence over the Easter and Anzac break in what was one of the biggest IT projects ever undertaken in the NZ Government state sector. 19.7 million taxpayer accounts were transferred from the IRD’s Legacy computer system to the new system known as START. According to the Inland Revenue Department the transition went extremely smoothly and as a result the key changes to our tax system for individuals are as follows:
- The tax refund process is now automatic and between the 20th May until the 31st July, all wage and salary earners whose only income is from employment, benefit or bank interest, will receive refunds automatically. In addition, all refunds will be direct credited to the individuals bank account. People who make donations now have the ability to claim their donation rebate online.
- The downside to the new changes is where wage and salary earners have tax to pay, this will be calculated automatically by IRD and an account will be sent out. If the amount is under $50 Inland Revenue Department will write the amount off, otherwise taxpayers (who don’t have a tax agent) will have until February of the following year to make the tax payment.
- The MyIR system now looks a lot different to what it did before the upgrade. There are some teething issues such as PAYE amounts due not agreeing to the amounts that employers submitted and in addition, where taxpayers pay provisional tax on the same day that GST is paid, the online GST return pre-populates the provisional tax automatically, so tax payers need to check that they do not pay their provisional tax twice.
While there will be teething issues and people work around the new system, overall the changes that the Inland Revenue Department have been making, do make sense and in time both employers and employees are going to be much better off with a simplified and much more modern online tax system.
Generally farmers are in a good space at present with the payout holding up reasonably well, and sheep and beef commodity prices are also reasonably firm. Many farms have recovered well from the dry summer and look to be well set up going into winter. Our advice to all farmers and business owners is to get your financial records in to your accountant as early as possible, so that they can make a start on these. Ensure that you keep your bank informed if you are going to have a deficit and will require additional funding. Don’t leave this to the last minute as your bank manager will not like these kinds of surprises. Have regular discussions with your accountant and farm advisor regarding your plans going forward and ensure that your staff get adequate time off to refresh and spend time with their families before the new season gets underway.