The Government has introduced legislation which, if passed into law, would mean Inland Revenue would receive more timely information about an individual’s income.
These improvements resulted from earlier consultations in the Making Tax Simpler series on Investment Income Information, and Better administration of PAYE and GST.
The improvements are in the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. This will become legislation once the Bill has passed. This is likely to be in 2018, and is subject to Parliamentary process.
Under the proposed law, Inland Revenue would receive more timely information about the income a person has earned that has had tax deducted, such as income from employment, interest and dividends.
In general terms, employers would tell Inland Revenue more regularly about the income earned and the tax being deducted from employees. Financial institutions, such as banks, would provide more information about the income earned and tax deducted from investors.
With more accurate and up to date information, and a modernised computer system, Inland Revenue would be able to assess whether a person’s tax withheld at source will equal their end-of-year tax liability.
With more accurate and up to date information about an individual’s tax affairs, Inland Revenue will be able to help ensure the person is on the right tax code.
If more than $200 of the individual’s income has been taxed at the wrong rate, Inland Revenue would issue a Personal Tax Summary (PTS) that shows if the individual is entitled to a refund or has tax to pay.
This will ensure more people are paying their fair share of tax.
Other people (that is, those under the $200 threshold) will still have to determine if they should request a PTS to find out if they have tax owing or a refund due.