Taxpayers may be in for shock tally

WELLINGTON - Hundreds of thousands of taxpayers could receive inaccurate tax statements this year, says the Inland Revenue Department.

It blames the faulty statements on teething problems with the introduction of the tax simplification system.

Department national manager Jared Mullen said yesterday that one in 10 employers had yet to provide the complete information the department needed to finish the earnings and personal tax summaries.

The department has urged employers to comply within three weeks.

Leading tax accountant John Shewan, a partner at PricewaterhouseCoopers, said it was too soon to panic.

"I don't think there is a major problem at this stage," he said.

"This is a major new tax initiative that wipes 1.2 million people from the drudgery of filing tax returns and we've got some teething problems, but the great Kiwi clobbering machine seems to be at it already.

"This information is not due from employers for three weeks so I don't think it is at all surprising that 10 per cent of employers haven't yet provided it."

Under the changes, three-quarters of wage and salary earners do not have to fill out an IR5 tax return this year and will not receive a tax statement from the department unless they ask for one.

However, nearly a million New Zealand taxpayers will be sent tax summaries within two months. About 300,000 recipients of family assistance and student loans will be sent personal tax statements from late June, and the department will begin sending 600,000 summaries of earnings late next month to people required to fill out IR3 returns because they earned income that was not taxed at source.

All those statements rely on employers sending, before the third week of next month, correct information about the people on their payrolls.

More than 17,000 employers, affecting about 250,000 employees, had not complied, Mr Mullen told National Radio.

About 4000 employers had provided no information to the department, causing an even bigger problem for their employees.

"If their employer, for whatever reason, hasn't filed any information with us then it could be that they receive a summary which doesn't show any income for that particular employer."

Mr Mullen said most employees would have paid the correct tax.

Faulty statements would be sent anyway in an attempt to flush out inaccuracies. Taxpayers would be encouraged to contact the department with the correct information.

Mr Mullen said tardy employers could face a barrage of demands from employees wanting the correct details.

The Employers Federation supported the call for its members to provide the information, but policy manager John Pask said the department should be flexible because it had created early bottlenecks for employers sending payroll information electronically.

Mr Shewan cautioned against the department issuing incorrect statements.

He said people who received tax statements were deemed by law to have signed them as correct and were liable to pay the tax.

- NZPA