Drop everything, it's tax time

By Brian Fallow

WELLINGTON - Employers who file their monthly PAYE returns the old-fashioned way, on paper, will henceforth receive them only days before they are due and face late filing penalties.

In a bid to make life easier for the 175,000 smaller employers who account for less than $100,000 PAYE a year, the IRD is sending out the monthly forms preprinted with employees' names, IRD numbers and tax codes.

Only the monetary amounts, and the details of employees who have left or joined the firm in the previous month, will have to be filled in.

As in the past, returns, with payment, are due on the 20th of the following month. But whereas employers used to receive the forms around the end of the month concerned, the new preprinted returns will not be released to New Zealand Post until the 8th or 10th of the following month.

Allowing some delay for postage, employers will be lucky to receive the returns a week before they are due back at the IRD.

IRD manager Bryre Patchell said that with employee details preprinted, all that was required was to transpose some numbers from the wage book.

But the smaller the turnaround timeframe, the greater the chance that employers or their accountants will have more pressing claims on their time and the deadline will be missed.

Alternatively, small firms can file electronically, as the 10,600 largest employers are required to do, or invest in IRD-approved software packages that generate the forms themselves.

Electronic filing, which began last month, is still experiencing serious teething troubles, however. The department said that as of noon yesterday, 7110 employers had successfully "ir-filed" for May.

That is about two-thirds of those required to do so. The deadline for this month was June 8.

Mr Patchell said some employers were still unable to "shake hands" with (be electronically recognised by) the IRD's computer. "We still have to find a solution to that."

The changes are part of a new regime which from next year will relieve 1.2 million wage and salary earners from the annual chore of filing IR5 tax returns.

Institute of Chartered Accountants tax director Jeff Owens said there was a wider problem, that the IRD tended to underestimate the time that elapsed between the date on one of its communications and when it reached the recipient.

"The department has an internal standard that correspondence should reach the recipient two to four days after it is dated. Our research indicates that six or seven days is more like it. In the meantime they have to take a more realistic timeframe into account and build that into their processing."