There is currently a phishing email (again) being sent out that claims to be from Inland Revenue. It suggests you have a tax refund due and a link to click on. Do not click on any links, as this in itself may trigger a virus download. Inland Revenue will never send an email that asks you to provide personal Inland Revenue information such, as your myIR account, userID and password. Neither will Inland Revenue send emails containing a direct link to a page to submit information and ask you to log in.
IRD have announced that major changes are being made to the child support scheme, starting next year. These changes are the first major overhaul of the child support scheme in 20 years. They reflect that life has changed a lot for families during this time.
Currently child support payments are based on the paying parent’s income and living circumstances. Shared care is only recognised when a parent or carer looks after children for at least 40% of nights in a year.
Key changes at a glance
From 1 April 2015, child support will be based on the following:
- The incomes of both parents will be used.
- More account will be taken of the amount of care provided by both parents and carers. Currently most child support only takes into account whether you care for a child for 40% of the time. After 1 April 2015 this threshold will lower to 28% (103 nights or more a year, or two nights a week).
- Both parents will receive assessments, which may include allowances for any other children of their own who live with them. This allowance will be based on the children’s ages and the estimated average costs of raising children in New Zealand.
- Parents will receive assessments that may include an allowance for any of their own children living with them, but not for a new partner, or any children who aren’t their own.
This means in some cases the amount of child support parents or carers pay or receive may change.
IRD will be contacting child support customers between July and December this year to either confirm the information they already have or to ask for more information if they need it.
You are likely to have seen the recent news coverage about the arrest, at the airport, of Terry Seripisos when he arrived back in New Zealand after being overseas for a number of months.
It appears his arrest was for unpaid Child Support payments he was supposed to pay several years ago.
While most people may not like paying tax this is the main source of income for the government to pay for things like hospitals, schools and everything else the government does; we may not like or agree with some of the things they spend our tax money on but we still have an obligation to pay our fair share.
At Savage & Savage our job is to make sure you account for the correct amount of tax without paying too much or too little.
If you owe IRD money it is important (as Terry Seripisos found out) that you pay it. If you can’t afford to pay it when due you can enter into an arrangement with IRD to pay it off but they will most likely add interest and then if you don’t keep to the arrangement they will add penalties as well as compounding interest. The amount owing can compound very quickly into a large sum of money, often many times the amount of the original debt.
And as Terry Seripisos found out you can be arrested at IRD’s request if you owe the tax man money. IRD have more powers than the police when it comes to tax matters.
From 1 October 2014 you’ll need to make sure Inland Revenue receives your payment on or before the due date to avoid penalties and interest. Posting it on the due date is no longer good enough; IRD must have your payment on or before the due date.
To be treated as a New Zealand Tax Resident an individual needs to be in NZ for 183 days in a 12-month period or have a permanent place of abode.
There has been some recent development around the issue of permanent place of abode to establish New Zealand Tax Residency. If you are leaving NZ but still have ties to NZ and a place hypothetically available to stay (even if not immediately available, for example an investment property or holiday home) you could still be classed as a NZ tax resident and therefore need to pay tax on your worldwide income in NZ.
Furthermore tax residency can be backdated, for example a person coming to NZ on a holiday, then coming back a month later with family to settle, could be a NZ tax resident from the first time they stepped of the plane.
While needing to file two tax returns in different countries can be a hassle the good news is that for countries that NZ has a double tax agreement with you will be able to claim overseas tax paid to the level of the NZ tax due here on that income. You can go to IRD’s website and see which countries these are.
If you are leaving or entering NZ for more than a holiday it is important to talk this through with your Chartered Accountant and advise them of your intentions, your business interest and interests in trusts and companies as these can also be affected by your NZ tax residency status. We will help you meet your tax obligations and ensure correct disclosures are filed with the IRD.
If you are leaving NZ permanently and meet the criteria for being a non-resident for tax purposes, you would only be taxed in NZ on your NZ sourced income. To cease being a tax resident an individual needs to no longer have a permanent place of abode and be absent from NZ for more than 325 days in a 12-month period.
We recently received the following notice from IRD
“Changes to the Inland Revenue payment service at Westpac
From 1 October 2014 customers will no longer be able to make cheque payments or drop off returns or forms at a Westpac branch. They will be able to continue making cash and eftpos payments at Westpac.
Customers can post cheque payments, returns and forms directly to Inland Revenue so we’re removing these services at Westpac. Customers can continue to make payments using online banking, credit and debit cards and international money transfers.
Inland Revenue encourages customers to make payments online. Digital payment channels are secure and faster than traditional payment methods, and are available 24 hours, seven days a week.
Paying on time
From 1 October 2014, payments posted to Inland Revenue need to be received by Inland Revenue on or before the due date to avoid payment penalties and interest. This means cheque payments can no longer be posted on the due date.
Over 70% of our payments are currently made online and we want to encourage more customers to pay electronically. Removing the unintended advantage to customers who post cheque payments on the due date enables us to treat all customers equally, regardless of their payment method.
It is obvious IRD want to encourage as many people as possible to use on-line payment services, these are easy to set up and we can help you if you are unsure. The main point is you can’t rely on the post to get your payment there on time so if you want to post cheques you will need to put them in the post at least 10 days prior to the due date or about 3 working days if you send them fast post.
From the 1st July 2014, the maximum parental leave payment for eligible employees and self-employed people is now $504.10 gross per week, while the minimum payment is $142.50.
To learn about parental leave in more detail or to find out more information visit the Department of Labour website.