Could $11.2m be owed to locals?

by Julie Taylor julie.taylor@dailypost.co.nz
Inland Revenue has clashed with a service claiming Rotorua people may be owed more than $11 million in unclaimed tax refunds.

Director of TaxRefunds.co.nz, Geoff Matthews, estimates up to $700 million in tax refunds have gone unclaimed nationally since compulsory tax returns for wage and salary earners were abolished in 2001.

Based on population, that means people in the Rotorua district could be owed $11.2 million of the total, he says.

But the Inland Revenue Department refutes the figure, saying there is no real way to know how much is owed because not everyone files tax returns.

Mr Matthews' firm offers a free online calculator to help people work out whether they are owed a refund and for a fee, submits a tax return on their behalf. It has been operating for a month and already claims to have submitted returns totalling more than $1 million in refunds.

In a statement, the Inland Revenue Department said the department did not accept the figure of $700 million in outstanding refunds.

"The core principle of New Zealand taxes is self-assessment. Until an assessment is raised, Inland Revenue has no way of knowing exactly how much tax is outstanding or how many refunds are due," it said.

Individuals who felt they might be owed a refund should complete a personal tax summary showing income and tax deduction details for the year, based on employment and pension or benefit information.

"It compares the tax a customer should have paid with the tax a customer has actually paid. It also shows whether they've paid the right amount, they're due a refund or they have tax to pay.

"People can work out for themselves if they are entitled to a refund - they do not have to use an accountant or a particular service."



Rotorua accountant Tim Wild, a director at Bright, Wild & Thomas, said it was unusual to find people owed large amounts of money by the tax department. Fewer were filing tax returns since they became voluntary for wage and salary earners and his firm now dealt mostly with business owners and their families.

"People who have had a large bonus or gone from a higher-paying job to a lower one may have changed tax rates. It is usually only about $50 and it is more common that people go up the pay scale and have been under taxed."

He said people were wary of contacting Inland Revenue in case they were found to owe money rather than being owed a refund. However, it was worth making inquiries for people who may have stopped work during the year or who had taken an extended break for some reason.

Stuart King, a director at Nairn Fisher Ltd, said some people could be missing out on Working for Families tax credits if they did not realise they were eligible.

* You can request a tax summary through www.ird.govt.nz or by calling 0800 257 444. To see if you are owed a refund see the IRD website or call 0800 257 773 for a personal tax worksheet (IR 746).

ARE YOU IN THE MONEY? Salary or wage earners could be owed a tax refund for the 2007-08 year if they:

Did not work a full year

Used a secondary tax code and earned less than $38,000

Are entitled to the child rebate or the income under $9880 rebate

Earned less than $38,000 and received dividends

Had more than one job during the year

Have expenses to claim