Moving on from Cheques
The Inland Revenue Department (IRD) have released a notification that from 1 March 2020 they will no longer be accepting cheques if taxpayers have an alternative payment option.
The alternative ways of making payments are:
- Online Banking (our preferred)
- MyIR either Direct Debit or Credit Card payments (not our recommendation at all)
- At a Westpac Bank branch (Eftpos or cash only)
- By Money Transfer for overseas taxpayers
IRD are also moving away from issuing cheques for tax refunds and will now require bank accounts to release tax credits. Please ensure when changing your bank account details, that the IRD system is updated immediately – all bank accounts added with IRD remains the taxpayers responsibility at all times.
Direct communications with IRD
With new and improved IRD systems and taxpayer access to myIR, taxpayers now have the ability to actively communicate with the IRD directly.
This is encouraged in straight forward matters, however we do recommend when you are unsure you make contact with us and let us handle it as your tax agent. Also, where you are authorising an action with the IRD ensure you obtain the name and call centre location of the IRD staff member, that way if there is any error we are able to rectify the matter quickly.
This message comes about from recent experiences where clients have given or received advice through the IRD communications channel in error and we have had to get involved to rectify. Using additional time and creating additional fees for clients.
Prescribed Investor Rates (PIR) for taxpayers with investment income
PIR rates are required to be selected at the time of commencing an investment deposit such as PIE or a KiwiSaver scheme; as well as during the term of that investment if your personal circumstances change in regards to your taxable earnings. There are 4 rates available being 0%, 10.5%, 17.5% and the maximum 28% and this will be determined based on your level of earnings.
It is important when selecting your PIR rate that you get the right deduction rate. If you select the correct rate then the income and PIE credits are not required to be included in your Income Tax return.
If you select an incorrect rate and it is lower than your marginal tax rate, then we are required to include your earnings in your Income Tax return, if you select a higher rate then we can’t include and you are not able to obtain the surplus tax credits back that you have paid in error.
To determine your PIR rate, for individuals, if in the last 2 years your taxable income was $14,000 or less and your taxable income plus your PIE income was $48,000 or less select 10.5%; if in the last 2 years your taxable income was $48,000 or less and your taxable income plus your PIE income was $70,000 or less select 17.5%; if your taxable income exceeds $70,000 select 28%. PIR rate for companies is always 0%. Trusts have complex choices so please ask your Accounting Specialist if you have any concerns.