People paying tax by cheque will need to be extra
vigilant to avoid running foul of new rules proposed by Inland
Revenue, Deloitte Dunedin associate tax director Phil Stevenson
Inland Revenue's current practice was to accept payment as
being made on time if a cheque was mailed and postmarked on
the due date.
Where a due date fell on a weekend or public holiday, an
extension was given until the next working day. Provincial
anniversary days were currently treated as public holidays.
Mr Stevenson said Inland Revenue was proposing to change its
practice to the cheque payment being required to be received
by the due date.
Provincial holidays would not longer be treated as public
holidays, under Inland Revenue proposals.
Returns could currently be filed and tax payments made at
Westpac branches. But Inland Revenue was proposing to make
changes so Westpac would no longer accept returns and
payments could only be made over the counter at Westpac, by
cash or eftpos, he said.
The proposals were an attempt by Inland Revenue to
''encourage'' electronic payments. More than 70% of tax
payments were made electronically and the tax department
wanted to increase that percentage.
''Some individuals and organisations cannot easily make
payment electronically. For example, people without internet
banking and a number of small business owners and
not-for-profit and sporting organisations with two
signatories,'' Mr Stevenson said.
The changes would also compress the time available to file
returns and post payments because recent changes to New
Zealand Post delivery times meant payment would need to be
posted well in advance of the due date to have any certainty
of arriving at Inland Revenue ''on time'', Mr Stevenson said.
Inland Revenue had indicated it would try to not present
post-dated cheques until the due date. However, it would also
not be responsible for any dishonour costs if cheques were
presented early and funds were not available.
''Anyone who pays by cheque will need to be careful they have
sufficient funds available at the time they post the cheque.
''Penalties will be charged the day after the due date.
Failing to meet the proposed deadlines will come at a cost.''
The only way to make payment by cheque on the due date would
be to physically deliver it to an Inland Revenue office,
which were not located in smaller towns.
Mr Stevenson said if the changes go through as proposed,
taxpayers who were not willing or able to make payments
electronically would need to file returns and make payment
earlier, as they would no longer be able to tell the
department ''the cheque's in the mail''.
It was understandable Inland Revenue would like to increase
the amount of electronic payments but it needed to be careful
doing so did not discourage voluntary compliance or add
further costs for smaller organisations.
''Inland Revenue needs to widely publicise any changes before
they become effective,'' Mr Stevenson said.