For the last 3 years IRD have been on a transformational journey…yes now you know why it takes them so long to answer the phone!
In all seriousness, this is an exciting step forward for all New Zealanders but has its own positive ramifications for us in the payroll world.
Each year since 2017 IRD have announced a release of tax, policy and service changes with the overall goal of making it easier for all of us to manage our tax obligations.
During this time IRD have been running 2 systems alongside each other, the old and the new. Currently when you use the IRD website the new system is having to talk to the old system, which then replicates the information into the new system, as it talks back to you.
From April, the old system will be no more, it will be all NEW, which means faster processing times and less frustration as you stare at the screen rethinking your life choices.
Come April 2020, Release 4 is due. There are 3 main areas that will affect our clients; Student Loans, KiwiSaver and PAYE. Release 5, and the last in the Business Transformation Project, is due out in April 2021 and will cover Child Support.
Right let’s kick on and learn some stuff together…
Ah the cost of being a student, I’m talking the fiscal cost not the emotional cost, that’s another article altogether.
- There will be greater visibility over your current loan balance and increased processing time for payments. This means an accurate figure and less chance you’ll overpay the IRD.
- Borrowers will have more effective ways of managing the loan debt and overseas based borrowers (oh they haven’t forgotten about you) will have more options to pay.
- The repayments will be deducted from more income types, not just wage and salary as they are now.
5th largest NZ government asset
714k active student loan borrowers. 1 in 7 are overseas
91% of student loan default is overseas based borrowers
Retirement; that thing which seems like a far-off dream but is really an anxiety inducing deadline…no? Just me? OK moving on…
- With the new changes, members will have greater visibility of their contributions, and more self-service options in myIR.
- For employers, KiwiSaver information will be incorporated into the ‘employee onboarding’ process so there is no need to complete separate forms.
- Scheme providers will have a new B2B (business to business) service that will replace the existing B2B service with a transition period of at least six months.
- Members will benefit from IRD’s increased transfer process between schemes, allowing fund balances to be updated faster.
9m members enrolled in KiwiSaver
16m visits to Kiwisaver.govt.nz
91% of new enrolments occur electronically with 52% through auto enrolment or employer opt in
PAYE (Tax at Source)
- In Release 4, IRD will complete the transition of PAYE into their new system which means PAYE processing will be held in a single employer account and notifications will be consolidated; thus streamlining employment information.
- Regular, electronic reporting of investment income becomes mandatory.
11 financial institutions submit 90% of investment income information
249k Investment income returns received by entities other than financial institutions
220k employers submitting employment information
If you’re still a little unsure about your obligations or the changes that will affect you, the IRD has tailored webinars to assist with preparation for the upcoming tax changes, if interested head to www.classic.ird.govt.nz/transformation/transformation-webinars.html to register.
We hope this sheds a little light on the changes ahead, and if not, maybe you learnt some fun facts you can share at the next party you attend. Please note; we do not guarantee these facts will impress others and be aware, once shared, you might not be invited back.