2012-13 IRD Compliance Focus Annual Review

IRD Tax UpdateThe 2012-2013 Compliance Focus annual review document has recently been released and gives guidelines on how to ensure correct tax amounts are collected.

Guidelines are as follows:

  1. Information updates.  Remember to advise all relevant government agencies of any changes in circumstances which impact on tax payments.  Ensure that  taxes deducted from gross income are correct – tables are available for both employees, employers or self employed to check these figures.
  2. To avoid penalties you should file and pay taxes on time.  If you have a problem with either of these you should discuss this with  us as soon as possible, preferably before the due date, so we can advise the IRD and work out a solution.
  3. The focus of the IRD in this report is to check on individuals who attempt to reduce their tax payments or conversely to increase their tax credit entitlement.

The IRD is aiming for clarification in the information supplied to them by taxpayers so keep abreast of what is happening.

Accidental avoidance of tax payments has been highlighted in campaigns by the IRD in an attempt to help the public avoid any pitfalls.  Improving interaction with related agencies will, they hope, lead to better communication and reporting practices resulting in improved voluntary compliance.

Taxes collected by the government pay for 80% of the country’s major expenses such as healthcare, education and law and order so are essential and need to be done correctly.

Tax agents (especially those who belong to a professional organisation) have been endorsed by the IRD  who state that clients who are being advised by a tax agent are more likely to be paying the correct amount of tax as the agent will be up to date with all current information.  So please contact us if you think we can help you.

Have you got an Employment Contract?  An employment agreement is essential these days as a recent ERA case proved.  The ERA ruled that an employee had been unjustifiably disadvantaged as she did not have an employment agreement – she was awarded $3,000 – the grievance was as follows.

The employee accepted a part time job of 25 hours a week in 2008.  These hours could be increased  to a maximum of 40 hours a week during busy periods.  Hours were extended at the request of the employee after she had been employed for a year, however after six months the extra work along with the increased hours was reduced.

According to the employee there was a full time vacancy available at the firm which she applied and was accepted for.  One of the three directors of the firm disputed this version of events and stated there was no written agreement to substantiate the story nor had any announcement been made in the workplace.  He also stated he was only authorised to adjust hours of work not make full time appointments.  Ultimately a decreased volume of work led to the employee’s hours being reduced upon which she resigned and started personal grievance proceedings.

The ERA ruled that the employer had not shown good faith by providing a written agreement – had it done so the employees hours would have been stated and could not have been disputed.  Another $7000 was awarded to the employee as she had been disadvantaged when her working hours were reduced.

If a collective agreement is not in place for employees it is legally required that individual employment agreements should be completed and signed.  This gives security to both the employer and employee.