How Kiwi Workers Use the Online Tax Refund System
MyTax.Co.NZ Survey Reveals How Kiwi Workers Use the Online Tax Refund System And Their Money
Six years after its launch at the peak of the market for new challenger businesses in the online tax refund services sector, MyTax.co.nz has seen off most of the competition. Though the Inland Revenue Department records more than 40 such operators, 90% of the market of one million annual individual tax refunds is shared by three players, among them MyTax.co.nz, which refunds an average of $500,000 to Kiwi taxpayers each week, with an average refund amount of $460.
Why do those one million people go online for a refund year after year? MyTax.co.nz recently surveyed nearly 1,400 customers via its Facebook page to find out.
• When asked how long a refund would have taken if they had to do it themselves, the highest proportion of respondents (28%) answered ‘Forever – I am useless at this kind of thing’; 23% said 10 to 30 minutes; 18% said 31 to 60 minutes; and 18% said one to two hours;
• Rather than completing a refund themselves through the manual method, respondents said they would use the time to:
o Hang out with friends/family (58%);
o Watch TV (12%);
o Cook (9%);
o Garden (8%);
o Play video games and play sport (6% each);
• Most respondents reported that they had never won money, and when asked how their last refund was used:
o 36% spent it on bills;
o 29% spent it on themselves;
o 21% saved it;
o 12% spent it on their children and 2% on their partner/spouse;
o 5% spent it on food and 2% on coffee/treats;
o An optimistic minority (0.25%) spent it on Lotto.
However, despite the ready engagement of these respondents and around one million more Kiwis in the tax refund system, an equal number of people have not yet done the same, and MyTax.co.nz is working on initiatives to trigger their action. One is a new application for smartphones that has been reviewed by the IRD and was designed to be even simpler than the website process.
Another is maintaining – and advertising – its fee for online applications at 15% of the refund amount, with a ‘no refund, no fee’ guarantee. This positions MyTax’s fee scaling lower than the two other major providers, and is warranted, founder and CEO Lester Binns says, by the quality of service and the level of data security, which is equal to that of major banks in New Zealand.
“If we didn’t have our software, we would need 300 people to process our 250,000 clients. With the investment we have made in software and automation, we can manage 250,000 clients annually with a full-time staff of 25, which obviously enables us to maintain a lower fee structure than most other companies, which can charge 20% or more.”
Mr Binns says uptake of the online service has grown steadily as time has become a more precious resource for many workers.
“We all prioritize what we devote our time to outside the office or worksite, and I think outsourcing of tasks, from childcare to mowing the lawn and cleaning the house has become normalized. We think of our service in the same way. We do charge a fee, but it’s the lowest among the top three providers in this sector, and will remain so. It reflects the security and reliability of our service and if you have tax to pay, there is no charge from us.”
MyTax’s revenue growth closely matches the growth in its market share: in the 2011/12 financial year the business doubled in size, and this year growth will be between 30% and 40%.
Today, between 30% and 40% of MyTax’s customers interact with the service via mobile devices, making the development of an iPhone app the logical need step to meet evolving customer needs. The fee for applications via the app is 12%. (More information about the app is provided below.)
MyTax is a member of OTANZ (Online Tax Association of New Zealand), a regulatory body that works to ensure tax refund agents operate in a transparent and trustworthy manner.
The MyTax Customer Survey
• 1,371 tax refund customers from around New Zealand completed the survey
by 1 April 2014 (via a link posted to the MyTax Facebook page);
• 28% of respondents were from the Auckland region, 10% from Waikato, 14%
from Wellington and 11% from Canterbury.
The MyTax iPhone Application
• The app is free to download from the Apple store, and download takes less than a minute;
• The app takes the user through nine pages to submit the required information. Once completed, the submission becomes active and the application is sent into the MyTax software database for processing by an expert tax agent;
• The processing includes an identity check, generally done by cross-checking driver licence details with NZTA to ensure the licence is valid and belongs to the person who has submitted the information;
• The fee for applications via the app is 12% compared with 15% for online applications;
• The ID verification is only required for first-time users of the MyTax system;
• Phase 2 of the phone app will include:
o A client log-in area to view refund status;
o An automatic link check at time of application to determine whether driver licence details are required;
o The ability to upload an ID picture directly from smartphone or iPad;
o The possible development of an android model.