Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

IR creates lose-lose for taxpayer

10 July 2019

Inland Revenue has created a favourable situation for itself, or from the taxpayers’ point of view a ‘lose-lose,’ with latest changes to its Use of Money Interest Rates, says John Cuthbertson, New Zealand Tax Leader for Chartered Accountants Australia and New Zealand.

In changes which come into effect on 29 August, IR will increase the interest rate it charges taxpayers on unpaid and under paid tax from 8.22% to 8.35%.

At the same time, it will cut the interest rate it pays taxpayers on over paid tax from 1.02% to 0.81%.

“That’s a lose-lose for the taxpayer,” said Cuthbertson. “My first thought it was a mistake, but unfortunately not.”

IR says its rates are in line with market interest rates.

“The new rates based on the floating first mortgage new customer housing rate (plus 2.5%) and the 90-day bank bill rate (plus 1%),” Cuthbertson said “We question the need to make this adjustment which is now relatively significant in a low-interest environment.”

They were last changed in March 2017.

He said there were “a couple of interesting things in the announcement.

“An area of long-standing concern is the differential between the interest rate IR charges taxpayers and the rate it expects taxpayers to pay.

“Instead of getting smaller, the size of that differential has increased steadily over the past four Use of Money Interest Rates revisions by almost one percentage point in total – in IR’s favour.

“All at a time when the floating first mortgage new customer housing rate and the 90-day bank bill rate are falling.

“We are in a low-interest environment, so it is hard for IR to justify the rate it charges tax payers.”

Cuthbertson said many taxpayers regarded the rate charged for underpayments as “more in the nature of a penalty”.


ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Serious Fraud Office: Commences Enquiries Into Allegations Of COVID-19 Wage Subsidy Fraud
The Serious Fraud Office has commenced a number of enquiries into alleged abuse of the Government’s COVID-19 Wage Subsidy. Director Julie Read said the allegations relate to multiple complex cases of potential fraud that have been referred to the agency following extensive investigations ... More>>



Environment: Preliminary Environmental Data On New Zealand’s Air Quality Released Today

The Ministry for the Environment and Stats NZ have published the Our air 2021: preliminary data release today. We are currently working to revise the Our air 2021 report to incorporate analysis of the World Health Organization (WHO) 2021 air quality guidelines that were released on 23 September 2021... More>>


Statistics: Food Prices Rise For Sixth Consecutive Month
Food prices rose 0.5 percent in September 2021 compared with August 2021, mainly influenced by higher prices for grocery food and meat, poultry, and fish, Stats NZ said today. September’s movement is the sixth consecutive monthly rise. After adjusting for seasonality, prices rose 0.9 percent... More>>



Reserve Bank: Robust Balance Sheets Yield Faster Economic Recovery

Stronger balance sheets for households, businesses, financial institutions and the government going into the pandemic contributed towards maintaining a sound financial system and yielding a faster economic recovery than following previous deep recessions... More>>


Transpower: Releases Independent Report Into Events Of August 9
Transpower’s Chief Executive Alison Andrew has today released an independent report into the grid emergency of August 9 when insufficient generation was available to meet demand, leading to some customers being disconnected... More>>

Bayleys: Latest Lockdown Adds Further Fuel To Industrial Property Market

The recent construction shutdown resulting from Auckland’s Covid 19’s lockdown restrictions has put additional pressure on an industrial property market that is already struggling to keep pace with demand... More>>