Community wise
Inland Revenue’s community update
September 2011 • IR 160
Public wants changes to child support scheme Everyone has a different view about what a fair child support scheme might look like and how to achieve it, and many people thought the current child support scheme was out of date. Last year the Government released a discussion document “Supporting children” that gave various options for updating the child support scheme and asked what the public thought about them. Seven in ten people responding to the Government’s consultation on the child support scheme wanted changes to the system. They thought the scheme could be fairer to all parties and be of more benefit to the children it’s set up to help. A website was set up where people could answer questions about the options and comment on key areas. Written submissions could also be sent through our usual public consultation channels. A total of 2,384 people gave feedback, these included receiving and paying parents, family members, lawyers and academics. The responses to some of the key areas and ideas are outlined here. If you want to read the full report you’ll find it at www.taxpolicy.ird.govt.nz “Supporting children – A summary of feedback on the discussion document”. The graph below shows what changes respondents would most like to see when considering the child support formula.
What part of the child support formula people would most like to see changed Taking both parents’ income into account
33%
Cost of raising children
24% 34%
How shared care is measured
9%
None of these
Payments and penalties There was wide support for deducting child support payments automatically from a parent’s pay, but there were some concerns about privacy and compliance costs for employers. Some objected to having a payment method imposed on them when they were compliant and suggested this option should only be for non-compliant parents.
Welcome to Community Wise In this issue: Changes to child support scheme, our compliance focus 2011–12, gift duty changes, new phone service for individual customers, donations tax credits, changes in family circumstances, redundancy tax credit extended, new Working for Families Tax Credits factsheets for migrant workers, keeping on top of your student loan, you’re tax exempt – do you need to register for GST, big jump in payroll giving uptake, updated publications. If you have any suggestions for topics you’d like covered in this newsletter, email
[email protected]
REMINDERS Student loan repayment bonus: If your student loan repayments for the year total $500 or more than your repayment amount, you may be entitled to a voluntary repayment bonus of 10% of the extra repayments. For more information go to www.ird.govt.nz/studentloans Update your subscription details: If you need to update your postal details, or want to add another agency to the mailing list for Community Wise, please email us at
[email protected]
In general, late payment penalties were seen as too harsh and discouraged paying parents from paying once they incurred a debt. Also, many parents felt the child support penalty rules should be changed so as not to discourage parents from resuming payments for their children.
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Our compliance focus for 2011–12 Most individuals and businesses voluntarily comply with their tax obligations, and we try to make it as easy as possible for them to do so. At the same time, we need to identify those who don’t comply and address this. We hope that raising awareness of compliance issues encourages you to review your own situation and check that everything’s in order. Every year we address areas that may be a risk to the Government’s revenue base. Our compliance focus publication Helping you get it right: Inland Revenue’s compliance focus 2011–12 released on July 27 gives a detailed description of our compliance plans for the coming year. It also highlights what you can do if you think you’ve got it wrong.
The main points for some groups are summarised below.
Working for Families Tax Credits (WfFTC) We will continue to ensure that people who are receiving WfFTC receive the correct amount. To avoid under- or over-payments, customers receiving Working for Families Tax Credits need to tell us about changes to their circumstances as soon as possible. The easiest way to do this is through our secure online services.
Individuals We will target customers who are cheating the tax system and encourage anyone who has been operating outside the tax system to make a voluntary disclosure. We’re launching a new customer verification system based on voice biometrics that will help us continue to keep your personal information safe from fraud.
Student loans
Previously, we’ve looked at patterns of non-compliant behaviour by customer group, eg, individuals, families, small and medium enterprises, and employers. However, most people don’t belong in just one customer group—you may be an individual who is an employer and has a family.
We’ll continue to contact people who have student loans including those who are overseas. This is to encourage them to pay off their loans and any outstanding debt.
This year we’ve grouped our compliance activities under four key themes:
We’ll use a case manager to help manage paying parents who don’t make payments. This case manager will monitor the paying parent until they are consistently making the correct payments on time.
• We provide confidence and certainty to our customers • We receive the right information at the right time • Everyone receives and pays the right amount • Everyone files and pays on time. These should give you a clearer indication of what you need to do to: • claim any entitlements at the right time • meet your tax obligations to register, file, report and pay on time.
Gift duty changes Changes made to the Estate and Gift Duties Act 1968 mean that gift duty will no longer be charged on liable gifts made on or after 1 October 2011. You’ll no longer be required to file a Gift statement (IR 196) for these gifts. You’ll still need to file an IR 196 for any gifts made before 1 October 2011 that total more than $12,000 in any 12-month period. For more information about gift duties go to www.ird.govt.nz (keyword: duties).
Child support
We’re contacting paying parents living in Australia if they aren’t meeting their obligations or aren’t making payments towards their arrears. We’ll pass their details on to the Australian Child Support Agency if they continue to ignore their obligations. You’ll find Helping you get it right: Inland Revenue’s compliance focus 2011–12 at www.ird.govt.nz “Are you getting it right?”.
New phone service for individual customers We’re introducing an added security feature to our phone service—voice ID (also known as voice biometrics)—initially for individual customers only. Voice ID recognises your unique voice pattern making identification easier and faster. To enrol call one of our 0800 numbers and quote your IRD number and date of birth. Your unique voice print will be recorded and held on file. Next time you call just say your IRD number and we’ll know who you are.
COMMUNITY WISE • September 2011
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Donations tax credits
Changes in family circumstances
Many people make charitable donations to organisations each year and claim a tax credit back from this payment. To be able to claim this tax credit you must donate to an approved donee organisation and your donation must meet certain criteria.
It’s important to keep us informed of any changes in your family circumstances as this may have an affect on your child support and/or Working for Families Tax Credits (WfFTC).
A donee organisation is a special type of organisation approved by Inland Revenue. To qualify for donee status the organisation must be a New Zealand society, institution, association, organisation, trust or fund that has charitable, cultural, benevolent or philanthropic purposes.
• parents separate, reconcile or get a new partner
For a list of donee organisations go to www.ird.govt.nz/donee-organisations Any donation to a donee organisation of $5 and over can potentially qualify for a donations tax credit if it is a gift. To be a gift it must: • be made voluntarily • provide a material benefit to the recipient without imposing a countervailing detriment • be for no consideration • provide no material benefit or advantage to the giver in return. Your total claim can’t be more than your taxable income for the year. If you need to file an IR 3 income tax return we may need to check your taxable income in your return when we process your claim. To avoid delays, send your tax credit claim and IR 3 tax return at the same time.
Helping victims of the Christchurch earthquake You can donate your tax credit refund to the victims of the Christchurch earthquake. Simply complete the “Transferring your tax credit” section at the bottom of the Tax credit claim (IR 526) form and Inland Revenue will pass your refund on to the Government’s Christchurch Earthquake Appeal on your behalf. For more information on claiming a donations tax credit go to www.ird.govt.nz (keywords: tax credits).
We need to know when: • a child leaves home (eg, to live with the other parent) • a child joins the family • you get a different type of income, eg, a change from salary or wages to a benefit • you change your weekly working hours • estimated family income increases or deceases • there’s a change in your shared care arrangements (child support and WfFTC have different rules for shared care) • a child becomes financially independent (eg, works on average for 30 hours or more each week or receives a benefit, student allowance or government assistance). Note: Your child support and/or WfFTC will be affected if your child meets the criteria for being financially independent regardless of how much they earn. If they work less than 30 hours a week it won’t change your entitlement to child support and/or WfFTC. If any of these changes have happened, or you aren’t sure whether your change in circumstances affects your payments or entitlement, please contact us: • for child support, call 0800 221 221 • for WfFTC, you can update any changes through your secure online services account at www.ird.govt.nz or by calling us on 0800 227 773.
Redundancy tax credit extended It’s not easy losing your job. If you’ve been made redundant you can still claim a redundancy tax credit, which can help to soften the blow, but only for redundancies derived before 1 October 2011. After that time the credit will no longer be available. To apply, you need to file a Redundancy tax credit (IR 524) form, which you can download from www.ird.govt.nz “Forms and guides”. The tax credit had been cancelled after tax rates went down last year, but was extended because of the Christchurch earthquakes and the resulting job losses. It was originally introduced to make it fairer for people whose income was pushed into a higher tax bracket when they got a lump-sum payment. Claims will be paid at the rate of 6 cents in the dollar up to the maximum of $3,600 for each redundancy payment. You have four years from the date of the redundancy payment to make a claim. To find out more about the redundancy tax credit, go to www.ird.govt.nz (keyword: rtc).
COMMUNITY WISE • September 2011
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New Working for Families Tax Credits factsheets for migrant communities Our new factsheet What are Working for Families Tax Credits (IR 691) helps migrant communities find out about their Working for Families entitlements and how to apply for them. We’ve had it translated into 10 other languages so customers can read the information in their own language: • Arabic (IR 979) • Cantonese (IR 977) • Hindi (IR 980) • Korean (IR 986) • Mandarin (IR 978)
Keeping on top of your student loan If you have a student loan, here are some tips to help you manage it.
Updating your contact details If you’ve recently changed your address, phone number or email address, let us know. Updating your contact details means we can send you the latest information to help you stay on top of your student loan. You can quickly and easily do this through our secure online services at www.ird.govt.nz/login Register now for online services if you haven’t already done so, at www.ird.govt.nz/register
• Thai (IR 987)
You can also change your address and phone number through New Zealand Post’s “Change My Address” online service. Go to www.nzpost.co.nz and give your new details to other organisations at the same time.
• Tongan (IR 693)
If you’re going overseas
• Vietnamese (IR 988). These are available on our website www.ird.govt.nz “Forms and guides”. You can also order printed copies of the IR 692 (Samoan), IR 693 (Tongan), IR 697 (Māori), IR 977 (Cantonese) and IR 978 (Mandarin) by calling 0800 257 773.
It’s important to keep your loan repayments up to date especially if you’re going overseas. Your loan will begin to incur interest if you’re overseas for more than 183 days—interest is charged at 6.6%. Interest and any late payment penalties will quickly make your loan balance grow.
You’re tax exempt – do you need to register for GST?
Making payments from overseas is easy. You can use your credit or debit card to pay online through our website. We waive the credit card convenience fee for student loan payments made from overseas.
• Māori (IR 697) • Samoan (IR 692)
Any business, organisation or entity must register for GST if its turnover is expected to exceed $60,000 in any 12-month period. Since turnover doesn’t include “unconditional gifts” it may be unclear at times whether an entity, such as a charity or non-profit body, has turnover of more than $60,000. An unconditional gift is defined as “a payment voluntarily made to any non-profit body for the carrying on or carrying out of the purposes of that non-profit body …; but does not include any payment made by the Crown or a public authority” (emphasis added).
If you’re in Australia or the UK, you can use www.orbitremit.com This is a free, online, money transfer service for student loan repayments. You can see all our payment options, including payments from overseas, at www.ird.govt.nz/makepayment
New one-stop shop A new webpage now lists key student loan information all on one page. Jointly developed by Studylink and Inland Revenue, it connects you to information on both websites. You can find the webpage at www.studentloans.studylink.govt.nz
If an entity’s main sources of income are donations and grants, either from government agencies or private entities, they may need to check their total turnover. As the definition for unconditional gift excludes any payment, such as grants, made by the Crown or a public authority, these will need to be included as turnover. You can find more tax information for non-profit organisations at www.ird.govt.nz/non-profit
Notify Me Notify Me is our email newsletter for people with student loans. When you subscribe you’ll receive emails three to six times a year that give you general student loan information and due date reminders to help you manage your loan. Subscribe at www.ird.govt.nz/studentloans
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Big jump in payroll giving uptake Since payroll giving was introduced, nearly $3.2 million has been donated directly from peoples’ pay to their favourite charity or donee organisation.
Payroll giving statistics for the 12 months to June 2011
Payroll giving must be offered by your employer for you to use it. It lets you donate to approved donee organisations (see page 3 for what this means) from your pay and get immediate tax credits that reduce your PAYE. You don’t need to wait until the end of the year to claim your tax credit. Only employers who electronically file their employer monthly schedule and deduction form can offer payroll giving to their employees. In March 2011 alone, over 5,000 employees donated nearly $500,000. Because the donations were made through payroll giving, these employees received immediate tax credits totalling $182,000. They didn’t need to wait until the end of the year to make a claim.
To find out more about payroll giving, go to www.ird.govt.nz (keywords: payroll giving).
Updated publications We regularly update our publications with the latest rate or legislation changes. Below are some publications we’ve recently reviewed and their version dates. If you keep copies on hand, please check that
you have the latest version. You can download them from “Forms and guides” at www.ird.govt.nz or order copies by calling 0800 257 773.
Publication
Updated because of …
Qualifying companies (IR 435) Version date: April 2011
changes to loss attributing qualifying companies and creation of new look-through company
Tax and your property transactions (IR 361) Version date: April 2011
changes to loss attributing qualifying companies and creation of new look-through company
Buying and selling residential property (IR 313) Version date: April 2011
changes to loss attributing qualifying companies and creation of new look-through company
Māori authorities (IR 487) Version date: May 2011
a new tax rate for Māori authorities and new format
Imputation guide (IR 274) Version date: April 2011
a reduction in company tax rate
Income tax in your first year of business (IR 325) Version date: April 2011
income tax rate changes from 1 October 2010 and new format
Information for salary and wage earners (IR 723) Version date: April 2011
income tax and RWT rate changes from 1 October 2010
What you need to know about personal tax summaries (IR 522) Version date: May 2011
income tax and RWT rate changes from 1 October 2010
Congratulations on your new baby (IR 753) Version date: July 2011
an annual update to paid parental leave rates
KiwiSaver products: Your introduction to KiwiSaver – employee information (KS 3) KiwiSaver employer guide (KS 4) Introducing KiwiSaver (KS 11) KiwiSaver: A guide for children and young people (KS 33) KiwiSaver: Making easy work of saving (KS 40) Version dates: July 2011
a reduction in member tax credit and change from the Government Actuary to the Financial Markets Authority
Penalties and payment agreements (IR 310) No longer available
information about child support penalties and arrangements on our website making this product obsolete
COMMUNITY WISE • September 2011
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Contacting our Inland Revenue staff We have staff who are responsible for educating customers on entitlements, obligations and compliance responsibilities, as well as providing seminars and workshops on request. Check the list below for staff in your area. Area and name
Contact number
Whangarei Luana Poata Mary Beuker (Kaitakawaenga Māori) Jules Newman Takapuna Nicola Sharp Tangi Folau Donna Porter Fred Astle (Kaitakawaenga Māori) Manukau Helen Lisiua Christina Fifita Paul Tuisaula Mala Singh Latisha Moana Preetika Dean Dil Kaikobadi Maari Hiakita (Kaitakawaenga Māori) Meremaihi Aloua (Kaitakawaenga Māori) Hamilton Chris Novak Christine Greer Maureen Thornton (Kaitakawaenga Māori) Whare Ngatai (Kaitakawaenga Māori) Tauranga Lorraine Morten Angela Myers Anthea Te Moana (Kaitakawaenga Māori) Rotorua Edward Nathan Nikki Emery (Kaitakawaenga Māori) Kelly Henry (Kaitakawaenga Māori) Gisborne Danny Fong Ian Procter (Kaitakawaenga Māori) Joanne Westrupp
09 986 6028 09 986 6186 09 986 6012 09 09 09 09
984 984 984 984
1641 1494 1228 1323
09 09 09 09 09 09 09 09 09
984 984 984 984 984 984 984 984 984
2230 2376 2343 2438 2141 2487 2257 2368 2042
07 959 0267 07 959 0655 07 959 0238 07 959 0725 07 927 5361 07 927 5355 07 927 2761
07 921 3824 07 921 3809 07 921 3822 06 986 2003 06 986 2028 06 986 2036
New Plymouth Emma-Jane Lund Naida Tuirirangi (Kaitakawaenga Māori) Napier Gemma Hughes Krystal Haimona Chrystal Kireka (Kaitakawaenga Māori) Palmerston North Philippa McNae Jo Hiscox Aroha Rongo Charmaine Ratima (Kaitakawaenga Māori) Rhys Mohi (Kaitakawaenga Māori) Aroha Paranihi (Kaitakawaenga Māori) Wellington Iriea Williams Tracey Taylor Jason Ratima (Kaitakawaenga Māori) Jo Matiaha (Kaitakawaenga Māori) Nelson Margaret King Dayveen Stephens (Kaitakawaenga Māori) Greymouth Juliette Henry Tina Smith Christchurch Heather Anderson Mary Jane Heu (Kaitakawaenga Māori) Pip McArtney Timaru Linda Fraser Dunedin Cindy Henry Christine Holtham (Kaitakawaenga Māori) Invercargill Rebecca Smith (Kaitakawaenga Māori)
06 968 4124 06 968 4026
06 974 6319 06 974 6311 06 974 6419 06 06 06 06
953 953 953 953
3096 3054 3050 3026
06 953 3105 06 953 3199 04 04 04 04
890 890 890 890
3294 1153 1284 4689
03 989 6158 03 989 6146
03 906 0317 03 906 0307 03 968 0475 03 968 0792 03 968 0762 03 956 7027 03 951 2071 03 955 7482
03 948 4164
KEY DATES & EVENTS September Student loans
October
November
Student loans
Student loans
For students who aren’t on a repayment holiday the second student loan instalment for non-resident borrowers living overseas is due.
All student loan borrowers will receive their six-monthly student loan statement.
The second student loan instalment is due. This applies to borrowers who earn over the threshold, or are self-employed, or earn income with no student loan repayments included. It also applies to salary and wage earners who have residual payments over $1,000.
Community Wise comments generally on topical tax issues relevant to the community. Every attempt is made to ensure the law is correctly interpreted, but articles are intended as a brief overview only. The examples provided are not intended to cover every possible factual situation.
Email:
[email protected]
www.ird.govt.nz COMMUNITY WISE • September 2011
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