Chartered accountants believe Kiwi taxpayers need more information about Inland Revenue’s upcoming transformation of the way tax is paid.
The annual survey of Chartered Accountants’ satisfaction with Inland Revenue also revealed concerns about the increased use of technology to provide real-time tax information to the department.
Nearly seven in 10 public practice chartered accountants surveyed had doubts about the readiness of taxpayers for business transformation, Chartered Accountants ANZ New Zealand tax leader Peter Vial said.
"These views are from the coal face of the tax system as many chartered accountants in public practice work with small and medium-sized businesses."
Deloitte Dunedin tax partner Peter Truman said the whole business transformation project by Inland Revenue would have a large impact on the way business interacted with the department and the manner in which the tax system was administered.
"It appears business is not as ready for this as it needs to be. GST is the first area which will go live from April 2017.
"While other changes are further off, businesses need to start working through how the changes will impact them."
The survey suggested Inland Revenue had a role to play in being more explicit about what the changes would mean in practice, Mr Truman said.
Respondents of the survey also raised concerns about providing real-time information to the department and taxpayers’ financial systems "talking" directly to Inland Revenue’s systems. They were worried about how accurately taxpayers would input information and their lack of access to compatible technology.
Mr Vial said the demand for more information was consistent with concerns from respondents about the readiness of taxpayers for the new tax administration system.
Revenue Minister Michael Woodhouse spoke at the CAANZ tax conference last week where he covered updates to the Government’s tax policy work programme through to August-September 2017.
Polson Higgs tax partner Michael Turner said the work programme continued to revolve around the two major ongoing projects comprising base erosion and profit-shifting on the international front and business transformation at home.
The work programme had a couple of inclusions as a result of recent case law and other issues which had come up during the past six months.
One was a review of the rule requiring a New Zealand bank account before an IRD number could be issued to an offshore person, he said. It was noted the issue had created an obstacle for people trying to comply.
Two further new items were looking at some slightly more technical but far-reaching points, Mr Turner said. An item has been included to look at trust beneficiaries as settlers of trusts. Currently, where a beneficiary has a credit current account with a trust they could be deemed a settler for tax purposes which had flow-on effects. The department indicated that was not the policy intent.
Another item on technical level related to a decision of the courts around the voting interest tests for corporate control where a corporate trustee was involved.
Again, while of a technical nature, due to the important flow-on effects of this decision the ultimate position reached could have real implications on tax planning, Mr Turner said.
