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Inland Revenue

Tax Policy

Chapter 2 - Integrating tax requirements into business processes using software

This section of the discussion document proposed integrating PAYE and GST requirements into business processes using software so that the tax processes are part of the normal business activity and would enable business and the like to use their business software to also meet their tax obligations.

Summary of comments

Submissions were generally supportive of the approach, but there was a view that the use of business software should be optional. Also submissions noted a number of concerns or issues that would need to be considered in the detailed design. Feedback on the integration of tax obligations into business software is also covered in chapters 4, 5 and 7.

“Any increase in filing frequency must come with an increased tolerance in relation to accuracy. Businesses operate to a level of materiality and will incur significant additional compliance costs if they are required to provide information to a level of accuracy over and above that which they apply in their business operations.”

“For those businesses that use commercially available software this makes sense.”

“…we consider paper-based alternatives will continue to be required for some time yet.”

“Customers need to remain in control of their own data and it must be easy for them to manage and keep track of their interactions with IR.”

“We submit that businesses should always be aware at which point information is being sent to Inland Revenue, and there should be an option to save the information and delay sending it to Inland Revenue (i.e. to enable it to be reviewed by a manager or tax adviser).”

“It is however important to recognise that the “do it yourself” nature of the small NZ business means that a large number do run a paper based system and do not want the extra monthly cost that accounting packages have… the freedom should be maintained to use a paper based system.”

“We are supportive of the Government’s initiative to integrate tax requirements into business processes using software, as such a change can be expected to reduce compliance costs for businesses in the long term…”

“Changes to business processes will involve short-term compliance costs for businesses.”

“Employers should be able to “self-correct” this [errors] on a go forward basis (that is, in future pay periods) without any imposition of penalties…We believe that such error correction should not be limited to minor errors (i.e. constrained by a $ figure).”

“…there should be an onus on Inland Revenue to respond to employers in a timely manner to allow them to update their payroll information…If employers are expected to update their systems and processes to interact with Inland Revenue in real-time, approval should be available in real-time.”