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

 

SMC Expert Reaction: Record Dry Spells And Effects On Forests

With no rain forecast before Sunday, Auckland is about to break a record for the city's longest dry spell. Niwa says Auckland is likely to hit 40 consecutive days without rain this weekend . The upper North Island is seeing severe meterological ... More>>

ALSO:

Reserve Bank: Official Cash Rate Remains At 1.0 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2 percent mid-point of our target range. ... More>>

ALSO:

Research: Climate Change Throws Tree Seeding Out Of Sync – New Study

Climate change is negatively affecting tree reproduction by throwing seed production systems out of synchronisation, according to a new international study co-authored by a University of Canterbury scientist. Many tree species worldwide produce large ... More>>

ALSO:


Science Media Centre: Novel Coronavirus Detected In China – Expert Reaction

The virus was detected after more than 40 people were hospitalised with pneumonia in Wuhan City, China and the outbreak traced to a large animal and seafood market. The Centers for Disease Control and Prevention reports that person-to-person transmission ... More>>

ALSO:

Science Media Centre: Flooding could release toxic gas – Expert Reaction

A chemical substance known as ouvea premix stored at an old paper mill in Mataura could release toxic ammonia gas if it comes in contact with water.More>>

ALSO: