IRD Compliance Focus 2012/2013

The IRD just released their annual Compliance Focus document for 2012-2013 to ‘help you get it right’. It outlines how Inland Revenue will focus its energies to net the correct amount of tax.

This year their focus is on:

  1. Receiving the right information at the right time. If your circumstances change remember to let us (and the other necessary government agencies) know. Also make sure you have the right amount of tax deducted at source and if you’re an employer that you’re deducting the right amount of tax from payments you are making.
  2. Filing and paying on time. If you think you’ll be unable to meet your tax obligations let us know as soon as possible so we can work with the IRD to manage your situation.
  3. Paying and receiving the right amount. IRD are focusing on individuals who try to reduce their tax liabilities or increase their entitlements to tax credits.

Providing confidence and certainty. The IRD are trying to clarify what they expect from taxpayers and provide more information – so keep an eye out. (continued over.)

The IRD has implemented several campaigns to educate the community and minimise accidental tax avoidance. They’re also forging better relationships with external agencies, strengthening reporting systems and encouraging open communication to proactively influence voluntary compliance.

Taxes fund over 80% of government programmes and services, including education, healthcare and policing so it’s in everyone’s best interests to get it right.

The IRD state that taxpayers ‘can have greater confidence that they are paying the right amount of tax when the advice and support their tax agent provides is based on complete information…. Recent research shows a clear correlation between the use of tax agents and increased voluntary compliance, particularly when the tax agent belongs to a professional organisation.’

So if you think this may affect you, give us a call.

Employment agreements are a must

A recent ERA ruling further proves how vital employment agreements are. An employee was awarded $3,000 after the ERA ruled that she had been unjustifiably disadvantaged through lack of an employment agreement.

Order of events: In 2008, the employee accepted an advertised role offering 25 hours per week with flexibility and potential for 40 hours during peak times. A year later, the employee requested more hours and the role expanded. After 6 months, the extra work was reduced along with the employee’s hours.

The employee claimed that she then verbally applied for, and accepted, a vacant full-time position at the company. One of the employer’s three directors later stated there was no offer of a full-time role, no documentation confirming the alleged appointment and no staff announcement. In addition, he said that he lacked the authority to make such an appointment and was only able to adjust hours.

Down the track the amount of work declined and the employer reduced the employee’s hours. She resigned and raised a personal grievance.

The verdict: It was decided that the employer acted without good faith by not providing an employment agreement. Had it done so, confusion surrounding the employee’s hours could have been avoided. This in turn might have prevented a further finding to the employer’s disadvantage relating to reduction in the employee’s working hours (for which compensation of another $7,000 was awarded).

Where an employee is not covered by a collective agreement, the law requires an individual employment agreement to be in writing. This promotes greater certainty and trust – which can only be a good thing.