Money Matters: Fewer forms to tax our brains

By MARY HOLM

Q. Inland Revenue has said it will not require between one and two million taxpayers to send in a tax return in future. What should those taxpayers do?

I thought you should ask for a tax return form and fill it in to see that you are paying enough tax on your income (pensions, interest, dividends etc).

If the tax code you quote to the various banks, public companies and so on is not high enough, I imagine the IRD would inform you and charge you extra if and when they did a check on you.

I feel you should fill in a return each year and keep it on record and file it to have information available.

I am sure there are a great number of people out there with the same questions. We would appreciate your clear and precise comments.


A. If you used to fill out the IR5 tax return - the one used by most wage and salary earners - you can't any more. The forms no longer exist.

But chances are that you won't need to do anything about your tax situation.

The IRD says the PAYE system is now more accurate. You've probably had the right amount, or close enough to it, deducted from your income during the year.

Still, there are exceptions .

For starters, about 271,000 taxpayers will receive personal tax summaries over the next couple of weeks, says Inland Revenue.

These include:

* Low and middle-income people who receive Family Assistance from the IRD.

* People who use a special tax code or were on the wrong tax code during the year.

* People with a student loan who are entitled to have some interest written off - generally those who haven't drawn down a new loan in the last financial year and are still New Zealand residents - will receive personal tax summaries in November.

Three other groups of people may need to take action. They are those who:

* Received more than $38,000 in taxable income and earned more than $200 in interest that was taxed at less than 33 per cent.

* Paid child support and received more than $200 in dividends or interest.

* Have a student loan, earned more than $14,716, and received more than $200 in dividends or interest.

People in these groups who don't receive a personal tax summary by the end of July need to ask for one.

There's no great rush, though. If you owe tax, you must pay it by February 7 2001 or, if you have a tax agent, by April 7 2001.

A personal tax summary gives your income and tax deduction details.

It also says whether you are due a refund or have to pay tax. You don't need to do any calculations. They have already been done for you.

If you don't think the summary information is correct, you will be able to tell Inland Revenue.

All taxpayers should note, too, that you now claim rebates on a separate one-page form.

If you have claimed a rebate for donations, childcare or housekeeper expenses (for those physically unable to do housework) in the past two years, you should have received the form in April.

If you didn't get a form, but think you are eligible this year, ring 0800 257 773 to order a form. Have your IRD number handy, as you'll need to key it in.

Filling out the form could be worth a few hundred dollars to you. For most people, it must be in by September 30.

People who want to claim two other rebates - the under $9,880 rebate and the child rebate (basically for those under 19, at school, who earned less than $1040 and had some tax deducted from their pay) - should ask for a personal tax summary in August.

Anyone else can also request a summary in August, on 0800 227 774.

Be warned, though, that it might not be a smart move. Once you ask for a summary you set the process in motion. If the summary shows that you owe tax, you will have to pay it.

The IRD assures me that, as long as you don't automatically receive a summary, and you're not in the "three other groups" above, if you do nothing you won't later be assessed and told that you have underpaid.

The Government has decided it's more efficient not to look at every last taxpayer, even though that means it will miss out on some tax revenue. The way the system is set up, it's expected to catch those likely to owe large amounts.

Inland Revenue says that, because of the improvements in the PAYE system, people are now less likely to get large refunds.

So, unless you're pretty sure you'll have a refund, it might be better to let sleeping tax issues lie.

If in doubt, you can always ring the IRD call centre on 0800 227 774. Footnote to the reader who worked less than six months of the year and is concerned that his PAYE tax was deducted as if he worked 12 months: If you don't receive a personal tax summary, you should request one in August. It sounds as if you're due for a refund.

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