The Taxman won’t take a cheque

From 1 March 2020, the New Zealand IRD will stop accepting tax payments by cheque.  They’ve provided a helpful resource for online payment options (www.ird.govt.nz/cheques) but what do you do if you can’t get online?

Cash or Eftpos at Westpac

You can still pay using cash or Eftpos at Westpac, but be aware of your Bank Limits if not a Westpac customer.  You will also need to generate a bar code from 1 July 2020 to deposit the money with Westpac.  More details on this are at http://www.ird.govt.nz/barcode.

Automatic Payments

If you like to cash flow your tax payments with smaller, regularly amounts, may be automatic payments are for you.  Get an IR586 form from the IRD website, fill it out and send it in.

Or Get Online

My Father-in-law was a technophobe until he discovered the joys of TradeMe .  Once he dipped his toes in to the online World and stretched to online banking, he hasn’t looked back.  Sometimes it can look worse than what it is!  Check with your Bank.  They have Teams dedicated to helping you get online.

Keep your records

Hi there

Lovely weekend to be indoors.

There was a recent case through the courts in respect of record keeping (or the absence of it) for IRD purposes.  Here’s a summary:

 Commissioner’s default assessments confirmed, 12 July 2012

In a case where a taxpayer did not keep useful or complete records and failed to file income tax and GST returns, the Taxation Review Authority (TRA) has held that the Commissioner’s revised schedules were the most reliable reconstruction allowed by tax law and confirmed them as the new assessments for the years in dispute.

Background

The dispute concerned the tax liability of the taxpayer for the years ended 31 March 1995 through to 31 March 2000 and GST assessments for GST periods falling between 1 April 1994 and ending on 31 March 2001. During the course of the hearing, the Commissioner accepted some amendments to the assessments based on new evidence produced by the taxpayer in the course of the hearing.

At material times, the taxpayer was a property developer with various other sources of income from dealing in motor vehicles on a part-time basis and taking on residential boarders.

The taxpayer did not keep adequate business records in accordance with s 22 of the Tax Administration Act 1994 or s 75 of the Goods and Services Tax Act 1985. He did not keep a cash book, a note book, journal or balance sheet. In this respect he was operating in breach of his obligations as a business taxpayer under the Tax Administration Act. He also failed to file timely tax returns.

The Taxation Review Authority

The TRA noted that in the absence of business or personal records over material times, it was very difficult for the taxpayer to prove the ingredients of the Commissioner’s assessments to be wrong on the balance of probabilities. The taxpayer’s difficulties were also exacerbated in this challenge by the delays occasioned by him failing to prosecute the case in a timely manner.

The TRA found that apart from specific examples where documentary proof had been provided or where the TRA had particular views, the taxpayer’s evidence was too unreliable to be accepted. The TRA said that there was no room for “reconstructions” and “guess work” in taxation. The taxpayer had failed to comply with the statutory duty placed on business taxpayers by the Tax Administration Act to keep accounts.

The TRA accepted that the assessments represented an honest attempt by the Commissioner to arrive at the amount of taxable income and the amount of tax due by the taxpayer for the income years in question. The taxpayer’s challenge was dismissed.

Case 1/2012 TRA [2012] NZTRA 01, TRA 148/04, 2 July 2012.

Morale of the story, make sure you keep adequate records for the time required, or the IRD has practically  the right to state the facts.

Till next time.