iRD new tax return system

[QOH]

Trying to find out if this means IRD are going to work out our imputation credits when they send an assessment. i cant find it on IRD website.

[Soolaimon]

Trying to find out if this means IRD are going to work out our imputation credits when they send an assessment. i cant find it on IRD website.

Same here.

[couta1]

At this point it will only cover bank interest and term deposits not shares as far as I'm aware.

[blackcap]

At this point it will only cover bank interest and term deposits not shares as far as I'm aware.

That is what I have been told too. I guess you will need to add the dividend and imputation amounts in your own IR. You can do that. That will adjust the amount of refund/to pay that you will receive. I am guessing the RWT portion on shares would be captured by the new system but do not quote me on that.

[winner69]

That is what I have been told too. I guess you will need to add the dividend and imputation amounts in your own IR. You can do that. That will adjust the amount of refund/to pay that you will receive. I am guessing the RWT portion on shares would be captured by the new system but do not quote me on that.

....and your overseas income and your other income ....and all the other stuff

[Banksie]

This page probably has the most comprehensive list of who needs to complete an IR3.
It says:


You'll also need to file an IR3 return if you:
[...]
* have excess imputation credits brought forward from the previous year
[...]


Which I take to mean, I won't have to fill in an IR3 if I don't have an excess of credits.

https://www.ird.govt.nz/income-tax-individual/end-year/ir3/iit-what-is-ir3.html

[Banksie]

Which I take to mean, I won't have to fill in an IR3 if I don't have an excess of credits.

https://www.ird.govt.nz/income-tax-individual/end-year/ir3/iit-what-is-ir3.html

Mmmh, I don't really understand the implications of this bit though:
* choose to include dividends received from a portfolio investment entity listed on the New Zealand Stock exchange, in order to claim imputation credits.

[Beagle]

According to my agent account manager (had my annual visit from her quite recently) all institutions paying dividends and interest need to file that information monthly with the IRD with effect from 1 April 2019. Make of that what you will but I gather the system for automatically prepopulating all your investment income in my IR won't be state of the art until the 2020 income tax year.

This first year of the IRD doing tax returns for some (predominantly wage and salary earners) taxpayers could be the proverbial "dog's breakfast"
Self employed will still have to complete their financial statements and tax return(s) in the usual way.

Their system is slated for a huge overhaul and update from this Friday 19th and the new system will apparently go live on 26 April 2019, all going well.
No year ended 31 March 2019 returns will be processed before 26 April.

If the IRD do assess a tax return for you automatically you will have the usual 2 month objection period. You should check anything they assess on your behalf very very carefully and see a good accountant if you have any queries.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12222350

[Sgt Pepper]

Does anyone know how you claim on an income insurance policy under the new system??

[777]

Somewhere I heard that if you file an IR3 now then you will continue to do so. So you will just start with one they pre populate and then include anything that has not. Much the same as now.

[777]

Mmmh, I don't really understand the implications of this bit though:
* choose to include dividends received from a portfolio investment entity listed on the New Zealand Stock exchange, in order to claim imputation credits.

For those who pay tax at 17.5c or 10.5 c in the dollar it is advantageous to claim the imputation credit. If on 30c or 33c then it is not.

[couta1]

For those who pay tax at 17.5c or 10.5 c in the dollar it is advantageous to claim the imputation credit. If on 30c or 33c then it is not. If I didnt claim my imputation credits against tax payable on my total income I would have a much larger tax bill(I'm on 33%)

[777]

If I didnt claim my imputation credits against tax payable on my total income I would have a much larger tax bill(I'm on 33%)

But we are talking about PIE payments, not dividend payments. Final tax on PIE's is 28% so if you are on 30c or 33c then you would be nuts to increase the tax to 33c.

[couta1]

But we are talking about PIE payments, not dividend payments. Final tax on PIE's is 28% so if you are on 30c or 33c then you would be nuts to increase the tax to 33c. Okay that's true for PIE.

[Banksie]

For those who pay tax at 17.5c or 10.5 c in the dollar it is advantageous to claim the imputation credit. If on 30c or 33c then it is not.

Thanks. I didn't realise the difference between "listed" PIE funds and "multi-rate" PIEs. I think I'm starting to grasp it :).

(InvestNow have a pretty clear write-up https://investnow.co.nz/pies-pie-tax-questions-answered/)

[QOH]

For those who pay tax at 17.5c or 10.5 c in the dollar it is advantageous to claim the imputation credit. If on 30c or 33c then it is not.

Yes I pay 17.5% tax rate, so certainly worthwhile for me to get my imputation tax credits.

[QOH]

Has anyone filled in their new tax return yet?
I found it much harder to follow when I got to imputation credits, got to the end but suspect I did it wrong.

[Waiuta]

I have filed mine and my wife as well. All our investments are in joint names. We have Interest, RWT, Dividends and Imputation credits and I also have a Partnership Income.
It has been relatively straight forward to fill in the forms and we have both received refunds already.
The donations refund is a lot easier now because you can enter online and attach a file instead of posting copied receipts. Another good thing is you can share your charitable receipts without having to enter them twice.

[simla]

Our joint holdings have so far been randomly allocated to one or other of us on the system. Does the system allow you to change that to split it equally when you file (or before or after)? The media reported a couple who had big troubles with that I thought.

[Waiuta]

The same happened with us so I filed individually and manually entered for us both but the donation refund allows you to allocate.
Our joint holdings have so far been randomly allocated to one or other of us on the system. Does the system allow you to change that to split it equally when you file (or before or after)? The media reported a couple who had big troubles with that I thought.

[simla]

Thanks, but I'm still unclear. You filed manually via the system, or manually on paper? And then you had to remove what it put in and type in the right answer yourself? Or you could change what it had on the system?

[Scrunch]

I recently did a couple of IR3's that included a rental property on line and the mix of information collected has changed a bit.
Previously the details required were the properties address, income, expenses and months available. A further breakdown of the income and expenditure wasn't required in the online version.

This time round on the online system the property address wasn't required but a lot more information was collected around the expenses claimed. This included a fields for the regular expenses (Interest, rates, insurance, property management fees) and selectable additional fields for maintenance expenses. It also details on each of the assets creating depreciation charges (or at least the provision to supply this - I'm not sure if it was optional or necessary). After entering it all, the refunds were paid out within a couple of days.

The IR3 dividend/imputation fields were pretty much as before.

[Waiuta]

For the IR3 I filed manually on the IRD system. I have done my own return for years and it is straight forward.What they have on the system doesn't reconcile with the certificates I had so I filed what I had received. I split all my income with my wife so I just enter half of all interest or dividends received for each of us as well as half of all RWT or Imputation credits.
Hope that helps.
Thanks, but I'm still unclear. You filed manually via the system, or manually on paper? And then you had to remove what it put in and type in the right answer yourself? Or you could change what it had on the system?

[simla]

Thanks. I think you must be saying that it does not force the information it has into the IR3 when you file, so you can just enter what you want when filing the IR3 online, so getting it right?

[Waiuta]

That's what has worked for me. I understand all Interest and RWT certificates will be entered by Link /Computershare type companies as well as all divies and imputation credits. I'm unsure when it's mandatory for them and if you are able to split the income. No doubt it will all work out.
Thanks. I think you must be saying that it does not force the information it has into the IR3 when you file, so you can just enter what you want when filing the IR3 online, so getting it right?

[simla]

Thanks for your patience in answering. I did not want to get trapped halfway through filing, unable to enter the right answer and yet unable to back out either. But you are saying I can just enter the right answer without hindrance, so that is reassuring. Thanks.

[777]

Thanks for your patience in answering. I did not want to get trapped halfway through filing, unable to enter the right answer and yet unable to back out either. But you are saying I can just enter the right answer without hindrance, so that is reassuring. Thanks.

You can do it without submitting it. It will just save as a draft until you are happy to hit the submit button.

[waikare]

I completed the wife and myself last Monday the 20th, all other income except dividends (Aust / NZ) was already on file, the wife received her return the next day, received the claimed amount of $700 odd, I claimed $3100, and still waiting a week later. Other years it has been around similar sum, and it has turned up in my account within a few days.

[777]

I completed the wife and myself last Monday the 20th, all other income except dividends (Aust / NZ) was already on file, the wife received her return the next day, received the claimed amount of $700 odd, I claimed $3100, and still waiting a week later. Other years it has been around similar sum, and it has turned up in my account within a few days.

Ensure it is not just sitting as a draft.

[sideline]

I completed the wife and myself last Monday the 20th, all other income except dividends (Aust / NZ) was already on file, the wife received her return the next day, received the claimed amount of $700 odd, I claimed $3100, and still waiting a week later. Other years it has been around similar sum, and it has turned up in my account within a few days.

I think there is a undisclosed threshold beyond which refunds are NOT paid automatically. I had it on a few occasions that I waited
and waited for my due refund. When I finally rang up the IRD I got put onto someone who went through my tax return over the
phone line by line with me until it was all ticked off. I got my refund a few days after that. So smaller refunds (< 2k maybe??) may
be automatic, but for bigger ones some extra verification might be required to get the money released.
N.B. nobody advised me that I had to do that, they just let me hang there until I picked up the phone!

[Grimy]

I have looked at what they had pre-populated on my IR3 form, but haven't completed/altered it yet.
I did see that one investment only had two quarters of income and tax listed, and on a couple the tax seemed way off for the income.
I've emailed to make sure they are not going to be making any changes to what's there before I jump in and add my adjustments, etc.

[Grimy]

Considering they aren't putting in the divies and imputation credits this year, it seemed surprising that when I went into last years return, all the companies that had paid me dividends were listed with the correct income and tax - considering I only put in totals - no individual companies.
If they have been able to do that, I don't know why all the income/tax/credits for dividends aren't automatically pre-populated this year.

[777]

I think there is a undisclosed threshold beyond which refunds are NOT paid automatically. I had it on a few occasions that I waited
and waited for my due refund. When I finally rang up the IRD I got put onto someone who went through my tax return over the
phone line by line with me until it was all ticked off. I got my refund a few days after that. So smaller refunds (< 2k maybe??) may
be automatic, but for bigger ones some extra verification might be required to get the money released.
N.B. nobody advised me that I had to do that, they just let me hang there until I picked up the phone!

Mine was $5,000 plus and arrived within 48hrs.

[glennj]

I did my own personal tax return via the re jigged web site. I also noted some info was "pre populated" but it was incomplete so I used my own summaries. My refund was a bit over $4000 and it took about 24hrs before it was in my bank account.
Thought I may be contacted re proof of some things e.g. overseas tax paid but that did not happen. Overall the new site was better than expected and easy to use though I do remember thinking one of the fields instructions was poorly phrased. My more complex business tax return is done by my accountant.

[waikare]

Ensure it is not just sitting as a draft.

Checked that out a few days after completing it, under Status it shows Processed 21/05/19, have also emailed them on Monday, them, but a response can take up to 15 working days.

I'll give it a couple days then test my patience by trying to phone them.

[bull....]

I helped with some testing on there new system at the start of the yr using my trading A/C and imputations did not work then properly when i did a mock return ( it calc imputations incorrectly and the carry forward didnt work) , neither did the prov tax options and a few other things.

[artemis]

I think there is a undisclosed threshold beyond which refunds are NOT paid automatically. I had it on a few occasions that I waited
and waited for my due refund. When I finally rang up the IRD I got put onto someone who went through my tax return over the
phone line by line with me until it was all ticked off. I got my refund a few days after that. So smaller refunds (< 2k maybe??) may
be automatic, but for bigger ones some extra verification might be required to get the money released.
N.B. nobody advised me that I had to do that, they just let me hang there until I picked up the phone!

Same thing happened to me last year, line by line over the phone then I had to figure out where the issue was as the call centre person declined to say. I decided in the end it was to do with net rents, being negative, sent in all the detail and refund was processed very quickly.

Under the new system it is a real pain doing IR3Rs (for rentals) as there is nowhere to put the address, either on the Rental Income page or the Depreciation page. I did a workaround by using one of the text fields but it does seem to be a weird oversight.

[Aaron]

T
Which I take to mean, I won't have to fill in an IR3 if I don't have an excess of credits.

Like losses from previous years, excess imputation credits can't be refunded but can be carried forward to future years to offset future income. If you don't file an IR3 your excess imputation credits will probably be lost.

For example if your only income for a year was a $10,000 fully imputed dividend you would have $2,800.00 imputation credits and $500.00 Dividend withholding tax(DWT). At $10,000 your tax rate is 10.5% so the tax of $1,050 is offset by $1,050 imp crs with the $1,750 excess credits carried forward to offset future years income and $500 of DWT will be refunded.

You would need to file the an IR3 for the next financial year to use your $1,750 excess credits.

Although you have probably already worked that out.

I have an issue with PIE funds. If your PIR rate is too high you don't get the overpaid tax back but if it is too low IRD require you to include the PIE income in your return and pay the shortfall. Although as discussed in this thread this does not apply to Portfolio Listed Entities (PLEs or listed PIEs) as you have the option to include the imputed income.PIEs I guess are really best as a 5% tax saving on investment income for people on the top 33% tax rate.

[Grimy]

I've just received a reply from IRD to my question.

"Thank you for your secure mail dated 21 May 2019, which asks whether there will be any further information added at our end.

The pre-populated fields covers sources of income (reportable income) that Inland Revenue receives information on by way of third party reporting, during, or shortly after the end of, the year. This includes all PAYE payments and resident and non-resident passive income (interest and dividend). To the extent that it has not been reported by a third party, the information in the pre-populated fields will be incomplete. We will not be changing any of the pre-populated amounts

Where the information is incomplete or incorrect, could you please amend the pre-populated fields to show the correct amount or add to the fields to include income and credits which are not pre-populated."

[waikare]

I completed the wife and myself last Monday the 20th, all other income except dividends (Aust / NZ) was already on file, the wife received her return the next day, received the claimed amount of $700 odd, I claimed $3100, and still waiting a week later. Other years it has been around similar sum, and it has turned up in my account within a few days.

Making progress, below is the reply I received earlier tonight from the IRD.

We received your Income tax return on the 20 May 2019 and it is being processed.
Income tax returns are processed within 10 weeks of when we receive them. Most are processed before this (80% of returns are processed within 6 weeks).
You will notified once the return has been processed.

[777]

Making progress, below is the reply I received earlier tonight from the IRD.

We received your Income tax return on the 20 May 2019 and it is being processed.
Income tax returns are processed within 10 weeks of when we receive them. Most are processed before this (80% of returns are processed within 6 weeks).
You will notified once the return has been processed.

Cut and paste answer.

[Waiuta]

Here's a helpful reply from the IRD which may be beneficial to members

Thank you for your message received regarding Donation Tax Credit receipts.

When filing donation receipt/s under your rebate account and you have requested to split the amount by completing the split section, you won't need ​
to complete a separate claim for your spouse, as the system will automatically process this due to the split request completed. What you are both
sharing/splitting will show equally on both of your account.

[artemis]

IRD changes spelt out on Stuff today, including this -

'Another significant change is that Inland Revenue will begin receiving monthly statements from organisations that pay dividends to taxpayers, instead of only receiving dividend information at the end of the tax year.That should mean smaller end-of-year tax bills or refunds for people with investment income, James said.'

https://www.stuff.co.nz/business/119269300/ir-sets-out-what-taxpayers-can-expect-next-for-their-18-billion-investment

[macduffy]

IRD changes spelt out on Stuff today, including this -

'Another significant change is that Inland Revenue will begin receiving monthly statements from organisations that pay dividends to taxpayers, instead of only receiving dividend information at the end of the tax year.That should mean smaller end-of-year tax bills or refunds for people with investment income, James said.'

https://www.stuff.co.nz/business/119269300/ir-sets-out-what-taxpayers-can-expect-next-for-their-18-billion-investment

Why should that be so?

[artemis]

Why should that be so?

Shareholders get alarmed at how much divvy income they are getting and switch from taxed dividends to untaxed growth? Heh, only partly joking. Otherwise, who knows.

[blackcap]

Why should that be so?

Good question. It should change nothing. Maybe then people that do not report divvy income will be caught by the net? But that would mean more tax is paid.

Maybe it means that the IRD can get onto employees in real time about potential tax codes that need to be changed? That would be my guess. Otherwise I am stumped.

[Grimy]

Yes, I think it is to be able to advise whether you are on the correct tax rate.
I have had communication from IRD saying I need to check I am on the correct tax rate for my investments, and my wife the same for her tax rate due to an increase in salary and investment income pushing her towards the next bracket (or incorrect secondary tax status- it was a few months back).
They certainly seem to be being more pro-active, instead of leaving it for a big clean up at the end of the tax year.

[macduffy]

Thanks, blackcap and Grimy for these explanations. Personally, I've been happy to overpay tax to avoid becoming entangled again in the provisional tax regime.