I’m Tania Sellers, Tax on Income Lead. Good morning. And I’m Corey Sinclair, Community Compliance Lead. Business Transformation: Progress to date and what’s next 22 November 2019 Presented by: Tania Sellers and Corey Sinclair 1 1
made following Release 3 in response to your feedback, and a look ahead at Releases 4 and Today, we’ll give you a brief overview of the progress we’ve made so far, the changes we 5. We’re sure you’ll have questions, some of which may be answered as we go through our presentation. So, we’d like you to hold them until the end. Our presentation should take about 40-45 minutes, so we’ll have 10-15 minutes for your questions at the end. What we’re covering today ▪ Progress so far ▪ Release 3 review your feedback ▪ Changes made 2020 automatic income tax assessment process ▪ What’s coming up next There’ll be time for questions at the end 2 2
working as well as they should. Although there have been challenges along the way, and not everything has worked as The systems, processes and legislative settings that support taxes and entitlements are being modernised in a series of releases. We are now in testing for Release 4. Major releases are occurring every year from 2017 to 2021, with all except the first aligning with the beginning of the tax year in April. This is now well underway and the first three Transformation has gone from being a high-level plan at the end of 2015 to a reality. We’re releases have been successfully implemented. smoothly as expected, overall the releases have been implemented successfully. People are still filing their returns and paying their tax and receiving the payments they are entitled to. After every release, we make a number of enhancements to improve things that aren’t about half-way through. We are now three releases in 2017 2018 2019 2020 2021 Release Release Release Release Release 1 2 3 4 5 ✓ ✓ ✓ Testing Design 3 3
Between 1 and 16 April 2019, we ran more than 180 seminars (34 for bookkeepers and 155 • 2,000 tax agents and 230 bookkeepers. • After go-live, during April to June 2019 we made another 1,300 visits. From research we did after go-live, we know that the agents we spoke to generally: • understood the need for change, and what the change was accomplishing felt that they knew what changes were coming before they happened sources were used at different times, for different types of questions and needs . • were happy with the volume and detail of information they received around the changes • were able to get answers to their questions, and appreciated the volume of information available to them • for tax agents) in 61 locations across the country. These were attended by approximately • We made more than 1,800 visits. We put a lot of effort into helping ensure tax agents were ready for these changes: The changes introduced in April 2019 were significant and represent the peak of transformation changes for intermediaries. Changes were made to legislation, systems and processes, and our website all at the same time. This meant you had to adapt to new requirements, new ways of doing things, and a new place to go for help and information. This is the only release that will involve such substantial changes for you. • From mid-October 2018 to March 2019, more than 4,000 tax agents and bookkeepers attended webinars we hosted. The webinars covered a variety of topics, including the proposed changes to end-of-year tax processes for individuals, payday filing and upcoming myIR changes. • received information through a range of education opportunities offered, and different 2019 has been the peak period for change ▪ We acknowledge the impact Release 3 had on you ▪ Transformation has been a steep learning curve ▪ We will grow our capability to better support you 4 4
Transformation was always going to result in a steep learning curve for agents and Inland Revenue. We acknowledge this is a time loss for you as well impacting your business. Our capability will grow so we can support you through these changes. We have plans to do things differently for Release 4 and we’ll talk to you more about that later. 4
the automatically issued assessments process, how information is displayed in myIR, website) are in place for Release 4. We are working with accounting sector representatives to maintain the level of support we are still updating the website regularly. know what has been fixed and what is in progress. This will continue in future releases and We have had very good feedback about the website as it is very transparent in letting you new processes work. Some were addressed for example by the further education we provided about how Not all the issues raised by you required us to make changes to our systems and processes. completing transactions in myIR, and the communications we send to customers. made around 150 system enhancements. A variety of issues have been raised, including A dedicated team worked on each of the 22 priority areas agreed with CA ANZ. In total, we support could be provided to you. with tax professional bodies we identified and agreed the top priorities so the right mix of that are making it more difficult or time consuming for you after Release 3. Together We have worked closely with the tax agent community to address the things you identified provided in the last few months and also to ensure that communication channels (like the new We are working with you to ensure systems and processes work as intended ▪ Dedicated team ▪ Improved visibility ▪ Worked closely with professional bodies 5 5
76% of bills were written off as they were less than $50. 528,000 customers had their bills 557,000 more New Zealanders received a refund and$188 million more was paid out. More than 1.3 million New Zealanders were automatically issued with tax refunds That's income tax assessments for 2.9 million customers. We finished issuing our automatically calculated income tax assessments on 25 July 2019. assessments sent in total over an eight-week period late May. The assessments were sent in batches via email and letter with around 2.9 million The new process for automatically issuing individual income tax assessments started in 14% of refunds were less than $1 and not issued. The average refund not paid out was 20 cents. written-off at $6.86 on average. We issued 670,000 requests for more income information . At the end of July, around 50%, or 351,000 people, had already done this. That left around 320,000 to provide us with more information. Many of them are your clients and have an extension of time to file. totalling $572 million at an average of $430. Compared to the year ending 31 March 2018, You are in control of finalising your clients’ assessments by 31 March 2020. we have better ways to track payments to ensure they are made on time. Customers have until 7 February 2020 to pay it. They now have more payment options and We sent out over 270,000 bills, totalling over $95 million at an average of $353 . The automatic assessment process for income tax ran successfully for the first time in 2019 Number Value 1,330,484 Refund $572,223,260 354,015 Refund – small not issued $70,161 319,304 Request for more information - 270,952 Bill $95,542,379 528,667 Bill written off $3,628,804 95,054 Nil assessment - 2,898,476 Total $671,464,604 6 6
We categorised customers based on income and other information we knew about. Clients of your clients to return their refunds to us. allow time for you to update your client’s income sources so we could place them into the right group. Once the automatic assessment process started, we received immediate feedback from agents: • We issued refunds in error. You knew some of your clients had other income to include and didn’t get a chance to do it before the refund went out. You then had to arrange for • position on what was essentially a record of potential income. You had no visibility over which group your clients were in. • You couldn’t understand how we put your clients into an assessment group. • 45 days wasn’t long enough to provide the additional information. • The functionality to update “other income” wasn’t used as the wording gave the tax agents were initially scheduled at the start of the select runs but were moved to later runs to 4. No assessment required 3. IR3 filed acknowledge that you expected it to work differently for clients of tax agents. While the automatic assessment process worked very well for a large number of people, we impression it was a legal declaration and you were concerned you would be taking a legal As a reminder the groups were: 1. Automatic assessment issued 2. More information required withing 45 days While successful, we acknowledge it didn’t run quite as you expected it to and made some changes What you told us How we have responded ▪ Refunds issued in error ▪ Publicised functionality ▪ No visibility ▪ Clarifying wording ▪ More time needed ▪ Enhanced client list report ▪ Other income functionality ▪ More time to provide information 7 7
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