The Government is proposing to make tax simpler for individuals, with people whose only income is from a salary, wages or investments no longer being required to file tax returns to receive tax refunds or to calculate any additional tax.
The consultation document, ‘Better administration of individuals Income Tax,’ was released today by Finance Minister Steven Joyce and Revenue Minister Judith Collins.
“The Government is very keen to ensure that the tax system is as simple as possible so people can clearly see the link between their efforts and their after-tax income. We started the process in Budget 2017 with the tax threshold changes and the removal of the Independent Earner Tax Credit, and this is the next step to a simpler fairer tax system,” Mr Joyce said.
No large tax bills
Ms Collins said that currently many people might be owed a refund or have tax to pay and not realise it.
“This could occur if they have not worked for the full year, they have fluctuating earnings, or some of their income has been taxed at the wrong rate. It would mean that Inland Revenue will have better income information and will be able to calculate and issue refunds, or let people know if they have tax to pay without the need for taxpayers to do anything else,” she said.
According to Mr Joyce, under the new system, people are less likely to end up with large tax bills at the end of the year.
“They will be paying a more accurate amount through the year and receive any refunds automatically. This is good news for about three million taxpayers,” Mr Joyce said.