4 March 2020 Webinar Slides with speaker notes Good afternoon - - PDF document

IN CONFIDENCE 4 March 2020 Webinar Slides with speaker notes Good afternoon everyone, and welcome to the webinar. My name is Trish Spence-Manning and I’m an External Relationship Manager at Inland Revenue, working with tax intermediaries and professional bodies from around the country. This is our final webinar for tax agents and bookkeepers for now, and today we’ll go into a bit more detail to help you get ready for when the next set of changes go live in April 2020. Before we start, let’s go over a few housekeeping notes. You’ll see a small control panel at the bottom of your screen and when you click on each of these buttons, you’ll see they either open or close some of the features which may already be open on your screen.

• On the left of your screen you’ll see the

slides box on which we’ll display the presentation slides during the session.

• The speaker bio section which may also

be open on your screen provides more information about the presenters.

• You should also see a Q&A box on your
• screen. By clicking in this box in the

“enter your question” section, you can send through questions during the

• session. Other participants won’t be able

to see your question, but we can see them on our side. We won’t be doing live Q&A today but still encourage you to send your questions through. We will follow the usual process of providing answers to your questions after the session and will make these available on the webinars page. A reminder that the webinar is best watched in

• Chrome. If you get disconnected or are unable

to stay for the whole session, the webinar will be available on Demand on our website. You

IN CONFIDENCE will also receive a link via mail to the On- Demand session once it’s available. Since October last year we’ve run several webinars providing detailed information around the changes to be implemented in April 2020. We’ve shared a lot of information and based on the feedback you’ve given us in the webinar surveys, it looks like most of you are comfortable with the upcoming changes and how it will affect you and your clients. Today we’ll recap some areas and also look at what some of these changes will look like in

• myIR. We’ll start with a quick look at

automatically issued income tax assessments and what will be different this year. We’ll take a closer look at employer changes, payments, income equalisation and finally, we’ll briefly cover student loans and KiwiSaver

• changes. Where possible, we’ve tried to include

screenshots to show you what has changed. We’ll also share some information about shutdown dates in April 2020 and where you can get support during this period as well as after the changes go live. So, before we look at the upcoming changes in more detail, I want to quickly talk about the automatically issued tax assessment process and how we’re responding to the feedback you sent us. As you all know, the new process for automatically issuing individual income tax assessments started in May 2019. This year we’re changing how we issue income tax assessments to your linked clients who receive reportable income only (i.e. they are not IR3 customers). Any clients you are linked to, at the time we process them, will not be automatically issued with an income tax assessment. Instead we will send the client a request for more information. If a client’s mail is being redirected this letter will be sent to you – if not it will be sent directly to your client. You or your client will need to review, add more information if needed, and complete the assessment. If you or your client do not review and complete the assessment, we’ll complete it automatically either on 31 March 2021 if your client has an Extension of Time (EOT), or after 45 days if your client does not have an EOT. If you know your client has income that requires them to file an IR3 e.g. self-employed

IN CONFIDENCE income or rental income, you can update their ‘Current income types’ in myIR. We recently amended the wording on this confirmation step, so it represents potential income, not actual income, based on feedback from tax agents. Now, let’s move on to an overview of the main changes, bearing in mind that some of these changes have already taken effect. When we go live with our system changes in mid-April, Student loans, KiwiSaver, income equalisation and PAYE financial information will move into our new system as part of our 4th major release. The following changes are effective 1 April 2020:

• More frequent, electronic investment

income reporting by financial institutions becomes mandatory which will give us more timely information to better calculate customers’ tax and social policy entitlements

• Then also from 1st April 2020, customers

will no longer be able to use residential rental deductions to offset tax on their non-property income (example salary and wages or business income). There are some changes that are already effective, and they are:

• From 1st March we stopped accepting

payment by cheque including cheques dated after 1 March 2020.

• In February 2020 we introduced the

new electronic RWT exemption register. From 1 April IR will no longer issue RWT certificates of exemption, meaning payers will no longer receive certificates from payees, and will need to check the register on the IR website to confirm a payee's RWT-exempt status.

• Those customers who currently hold a

valid RWT certificate of exemption, won’t need to do anything, as they have automatically been placed on the register.

• The Research & Development tax

incentive was introduced in October

• 2019. This means businesses who

spend at least $50,000 a year on R&D can apply for a tax credit, incentivising businesses to perform research and development.

• We introduced short process rulings in

October 2019. These rulings are designed for customers who need certainty on how a tax law applies to

IN CONFIDENCE their situation and is designed to be faster and more cost-effective than a binding ruling. This service became available 1 October 2019 and allows taxpayers with annual gross income of less than $20 million to seek clarification

• n a matter involving tax of less than $1

million. We won’t have time to recap all these today, but if you want to refresh your memory on what these changes entail, detailed information is available on our website, or you could watch

• ne of our previous webinars, where this

information is covered in detail. There are a few changes that have been applied across myIR. We received feedback that the 'My details' tab in myIR is confusing so as a result, we are changing it back to its previous name - “Names and Addresses “. The registration details that currently sit in this tab will move to the summary tab within each account. Customers will be able to submit an application for relief through myIR. It’s worth nothing that only tax preparers with a customer master link will have access to the web request. Now let’s recap what’s changing for employers effective mid-April 2020. All employer accounts that hold information employers have filed will be combined into a single Employer or as you know it a Payroll account. This includes PAYE, student loans, child support, employee and employer KiwiSaver deductions, and employer superannuation contribution tax deductions. This will provide a single view of all employment activities.

• Currently employers file PAYE returns in

the new system, but all the back-end processes are managed in the old

• system. With us moving the backend

processing into our new system mid- April 2020, transactions and payments will show up a lot sooner, which will result in an improved user experience.

• Employers will be able to pay when they

file in myIR if they want to. The due date for payment isn’t changing, but employers can choose to file and pay at the same time if that works better for them.

IN CONFIDENCE We are making some changes to improve the

• verall usability of myIR so let’s take a look at

some of the changes you’ll notice. Employer transactions will display differently in myIR as transactions are aligned with payday filing.

• Employers will notice a

change in name to the

• account. It is currently

‘Payroll (was ir-File)’ and will be changed to ‘Payroll’.

• The landing page of the

Payroll account is being redesigned, with a summary screen showing the account balance, registration details and any recent activity.

• Each time you file an

employment return the transactions will update, (reverse & replace) to include the return you have filed, and you will still see the breakdown of each deduction type (e.g. PAYE, student loan deductions etc.)

• Due to the removal of the IR345, twice

monthly filers are no longer required to have two periods generated for each

• month. Instead, they will have a single

monthly period. All payday information will be stored in the monthly period, with twice monthly payment details managed as bill items. As mentioned on the previous slide, all employer accounts that hold information employers have filed will be combined into a single Employer account. The new code, EMP, will allow employers to make one payment to cover all their employer associated deduction types. The codes for the remaining associated employer deduction types will be removed. This means that customers will no longer be able to make payments using the following codes: CSE – Child support employer KSE – KiwiSaver employee KSR – KiwiSaver employer PAY – Pay as You Earn SLE – Student loan employer SSC – Superannuation Scheme Contributions Inland Revenue will also introduce new codes to allow customers to make payments for

IN CONFIDENCE Income Equalisation, Environment Restoration and Research and Development. The codes are as follows: ERA – Environment Restoration EQU – Income Equalisation RDI – Research and Development Tax Incentive UCM – Unclaimed Monies Here is a screenshot of the new employer/payroll account in myIR.

• There’s a new summary page that will

show registration details and a summary

• f any unpaid assessments.

Here is an example of the transactions in the consolidated payroll account for a small employer.

• The transaction display will now

consolidate the individual components into one period.

• The KiwiSaver employer contributions

will also be separate transactions, split into compulsory employer contributions and voluntary employer contributions.

• Customers will also see the balance of

each component increase each time they submit an EI.

• The ‘view return’ link will show the

breakdown of that transaction for each EI filed in that month.

• 1. We’ll take a consolidated approach to

employer communication which means we’ll reduce the number of communication we issue to employers by combining content. Currently correspondence is issued to employers based on individual account or tax types, resulting in multiple letters. The amount

• f letters sent will be reduced by grouping
• correspondence. From mid-April 2020 we’ll

group our communications by ‘topic’. The 2 main groupings will be:

• Updates to an employer’s employment

information to start or stop deductions for employees, and

• Updates to deductions employers are

currently making for employees (for example notification of a tailored tax code).

IN CONFIDENCE Based on customer feedback, the new letters will display one employee per page and all updates required for that employee will be consolidated to that one page. This will make it easier for employers to align any correspondence received for their employees to their personal files.

• 2. Employers will now receive a letter when an

employee’s student loan balance is expected to be repaid within three months, based on repayment history. The letter will advise of the final repayments to ensure the loan is repaid in full, but not overpaid.

• 3. Employers will be asked to collect more

information from employees which will assist us to better administer social policies, including hours paid. Reporting of this information will be voluntary and only collected via Gateway Services and myIR filing. There will be further changes to the onboarding process for new employees which will reduce confusion and repetition of information for employers.

• The ‘New Employee Details’ (IR346) and

the ‘KiwiSaver Enrolment’ (KS1) will be combined into one ‘Employee Details’ form, both in myIR and on paper. Let’s take a look at what the myIR new employee form looks like. I know the image is quite small, but this is an indication of what the new employee information screen looks like in myIR

• The employee onboarding service will

capture the IR346 and the KS1 information.

• The first name and last name fields will

be mandatory and will default to the name on the EI. If the employer wants to have a different name, they will have the option to change this.

• Employers will need to advise of any

income that will be received by a new employee that is exempt from KiwiSaver contributions.

• We’ve changed the KiwiSaver status

details you need to provide when you

• nboard a new employee to incorporate

details you used to provide on the KS1. This means you won’t have to submit a separate KS1.

IN CONFIDENCE The existing service to update employee details will be broken down into smaller sections, making it easier to navigate to the specific details you want to update. Each section will have its own edit button.

• A new Employment Information (EI)

return is being designed to accommodate the additional fields for:

• Employee Share Income (ESS),
• extra compulsory deductions for

student loans (SLCIR),

• extra voluntary deductions for

student loans (SLBOR), and

• prior period adjustments.
• Previously employers had to add a new

employee line for each of these

• deductions. Now they can use these

new fields to record these deductions in the same employee line they are reporting gross income, PAYE and other deductions i.e. they won’t need to have the same employee on multiple lines in their EI because of these deductions

• The new return version will be available

for customers who file on paper or

• nscreen in myIR and should use the

new version for paydays from 1 May.

• Customers who use the file upload

service in myIR or file direct from their software, will see the change when their software providers implement the new version, sometime over the next 12 or so months. Employers will have the ability to both file and pay each time they submit their EI through

• myIR. Although the due date for payment is

not changing, this enhancement allows employers to make an early payment each payday if this is more convenient for them. If you complete EI’s for your clients there are some changes for direct debits that we’ll cover

• ff in the payments section of this webinar.

IN CONFIDENCE And finally,

• The PAYE calculator on the IR website

will have an option to export what’s entered when calculating deductions for employees into an EI. This will be in CSV format to allow you to use the file upload functionality within myIR. Now let’s move on to payments: There will be several changes that will impact how you and your clients make

• payments. These will include:
• IR will no longer accept cheques,

including post-dated cheques from 1 March 2020. This will apply to all account types.

• Payments by debit or credit card can be

made over the phone through

• SPK2IR. The standard convenience fee
• f 1.42%, charged by the bank, will

apply (unless it is an overseas student loan or child support payment).

• You and your clients can continue to pay

us by credit card, debit card and online

• banking. But, after Easter 2020, if you

choose to pay by direct debit in myIR from a new bank account a direct debit authority will need to be set up.

• This replaces the current process

where you confirm you have signing authority on a bank account by ticking a box when you set up the payment.

• Setting up the authority is a one-
• ff process and will need to be

set up separately for each new bank account before a direct debit payment can be made.

• You’ll no longer be able to initiate

a direct debit payment for your client to approve in myIR. If your client wants to pay us by direct debit, they will need to set up an ‘authority’ for their own bank account in myIR.

• You can continue to pay by direct

debit for a client if you have signing authority on the bank account being used (e.g. it’s your agency’s own bank account) after you have set up the authority in myIR.

IN CONFIDENCE

• These changes are taking place

to ensure that direct debits are properly authorized by the bank account owner. The income equalisation scheme is a mechanism used by eligible customers to even

• ut fluctuations in income by spreading their

gross income from year to year. The types of businesses that are eligible for income equalisation include:

• Farming, agriculture, and horticulture
• Fishing, which also includes rock oyster

farming, mussel farming and freshwater farming, and

• Forestry

Income equalisation was previously managed manually and is now moving into our new system making it a lot easier for customers to apply and access funds. Some of the benefits of having it in our new system includes,

• Your client will have visibility of Income

equalisation (EQU) accounts in myIR

• Your client will be able to pay by direct

debit, over the phone, credit card and

• nline banking.
• Withdrawals will be paid by direct credit

instead of cheque

• Income equalisation will be

automatically linked as part of being linked for income tax

• The paper IR155 (Income equalisation

deposit/refund form) will be removed and replaced with a digital request in myIR

• Cheques will no longer be accepted as a

form of payment, and IR will no longer issue withdrawals by cheque. As a result, the payment channels for EQU will become electronic, with all withdrawals issued by direct credit. So, in a nutshell, income equalisation customers will find it much easier to deal with us, contribute and access money much faster.

IN CONFIDENCE This screenshot shows what the income equalisation summary tab looks like. Customers will be able to see their account balance, filing frequency and recent activity. Now we’ll take a brief look at what’s changing

• n Student Loans.

I’ll cover the main changes, and if you’d like to find out more, please watch the combined Student Loans/KiwiSaver webinar which has been made available on the webinars page of

• ur website.

From mid-April 2020, student loans will be fully administered in our new system. The way student loan information is processed and stored will become more streamlined and reduce manual handling, increasing accuracy.

• You will be able to bring your clients’

student loan accounts into your workspace, if linked.

• As student loans will be administered in

START, repayments will be processed faster, and you will be able to keep better track of your clients’ student loans in myIR.

• Due dates for student loan assessments

and reassessments will change from 60 days to 30 days after the due date to align to other account types.

• Student loan commissioner initiated

recovery (SLCIR) notices will be automatically issued to customers where applicable, unless there is a reason that it needs to be manually reviewed e.g. the under deduction is unlikely to be repaid within 12 months based on the last three months of repayment deductions or there is no valid

• employer. Updating and closing SLCIR

notices will also be done automatically where possible, this will greatly reduce manual intervention.

• There is currently very low awareness

and up-take of provisions to reduce repayments from salary and wages. IR will use analytics to proactively contact customers who may be eligible for reduced repayments.

• The ability to make payments 24/7

through SPK2IR is being introduced for

IN CONFIDENCE New Zealand-based customers, and those calling on non-toll-free lines from

• verseas.
• New Zealand based customers do not

attract interest on their loan. IR will no longer charge and reverse interest on their account, making their myIR information and statements much easier to read.

• A client's employer will receive a letter

when their student loan balance is expected to be repaid within three months based on their repayment history, to advise of the final repayments to ensure the loan is repaid in full, but not overpaid.

• The adjusted net income threshold will

be reduced from $1500 to $500 for student loan customers.

• And the myIR payment functionality has

expanded to include to more countries including the UK, Canada, USA and the Single Euro Payments area. This will enable our customers to make payments to Inland Revenue from more countries overseas. Enhancements are being made to myIR to improve management of loans, by simplifying the information available in myIR, and introducing new functionality previously managed through paper or email channels.

• The account summary screen has been

redesigned based on feedback from student loan customers. It will now clearly show their total loan balance, any balances owed, how to make extra payments, and if interest is being charged and at what rate.

• The student loan account will be mobile
• ptimised, allowing it to automatically

adjust for use on mobile phones, tablets and desktops.

• Customers will be able to see their

international travel movements in myIR, including arrival and departures dates.

• The repayment calculator will also be

available in myIR to assist customers to calculate how quickly their loan will be paid off with or without additional

• repayments. The calculator will pre-

populate with the customer’s student loan balance, current year income (if they are based in New Zealand) and student loan interest status to assist the customer in completing the calculation.

IN CONFIDENCE

• Customers will be able to update their

Alternative Contact Person (ACP) in

• myIR. The ACP will be able to choose

whether they wish to remain an ACP and if not, they can remove themselves. They will be able to see each other’s name but not any details of the loan or contact details.

• Customers will have the ability to make

regular and ad-hoc payments against their loan in myIR. As there will be additional myIR payment functionality, student loan customers will be able to pay using the direct debit option from Australia, UK, Europe, US and Canada. This is in addition to all current repayment options available.

• There will be a new interest status

calculator so customers can see the impact travel could have on the interest status of their loan. Customers will be able to check their plans and make adjustments if necessary.

• Customers who meet the criteria to

remain interest free while overseas will be able to apply through a web request in myIR, and also advise us of their worldwide income.

• Customers will be able to set a

preference for what to do on any over- repayments on their loan. It will automatically default to going towards their student loan, but we will also introduce options to pay off debts in

• ther tax types, refund any credit or

transfer it to their KiwiSaver.

• For customers who are applying to have

a reduced rate on their salary and wages; some of this functionality is already available in myIR such as when people can’t afford the 12% repayment

• rate. Customers will be able to apply for

all of these provisions through

• myIR. Where possible, applications will

be pre-populated with the information we hold to reduce the effort involved. This application will also link to the hardship application, that will also be available in myIR.

• Like other accounts in myIR, you will

also have access to these web services for your clients if you are linked.

IN CONFIDENCE This is an example of what the Student loans account will look like for a client who has interim repayments and amounts overdue. The total loan balance is also still

• prominent. To view the interim assessment

and assessment calculations for this customer, you need to click ‘View assessments’ under the “I want to” menu. For the majority of student loan customers, there is no Period tab for the Student loans account. For more information about the changes in myIR for student loans please refer to our student loans webinar held on 19th February or register for one of our upcoming seminars. We’ve included two slides on KiwiSaver to summarise what will change from 1 April 2020. This is not an exhaustive list so if you’d like to see the detail around what’s changing on KiwiSaver, please watch the KiwiSaver/Student Loans webinar on Demand held on 19th February. Several policy changes for KiwiSaver have already been made. These changes have already been implemented to allow more people to join KiwiSaver, as well as allowing members to better tailor their KiwiSaver account to fit their needs. From 1 April 2019:

• Two new contribution rates – 6% and

10% – were introduced to KiwiSaver, giving members more options. Members can now choose to contribute to their KiwiSaver from their salary/wages at either 3%, 4%, 6%, 8% or 10%.

• The Contribution Holiday, where

members can elect to temporarily cease contributing to their KiwiSaver account for a specific period of time, has been renamed to Savings Suspension. The suspension also now has a maximum period of one year before a KiwiSaver member will need to renew it.

• The Member Tax Credit (MTC) was also

renamed to Government Contribution (GVC). From 1 July 2019:

• The KiwiSaver scheme was opened up

to all ages. Customers over 65 years of age are now eligible to join KiwiSaver. However, they will have no entitlement to receive government contributions, and any employer contributions will be at the discretion of their employer.

• New members will no longer be locked

into the scheme for five years before

IN CONFIDENCE they can withdraw funds. Changes were also made so that members between the ages of 60 - 64 inclusive, who enrolled on or after 1 July 2019 will be able to withdraw their KiwiSaver funds at 65. Although, once they turn 65 they will have no entitlement to receive government contributions, and any employer contributions will be at the discretion of their employer. From 1 April 2020:

• KiwiSaver members who enrolled in

KiwiSaver before July 2019 and were aged between 60 and 64 inclusive when they enrolled, can elect to opt out of the five-year lock in period any time after they reach the age of eligibility for NZ Super (currently 65 years old). If a member opts out of the lock in period, they will not receive government contributions and their employer can stop their contributions. From mid-April 2020, KiwiSaver will be fully administered in our new system. The way core KiwiSaver information is processed will become more streamlined and involve less manual handling, resulting in more accuracy and a reduction in time. If you need access to a client’s KiwiSaver information you will need to be set up as a nominated person. There are some changes that will benefit your clients:

• Voluntary member transfers between

Scheme Providers will now need to be completed within 10 working days instead of 35. This change will allow more visibility of where funds are and provide more reassurance that their investment is being managed efficiently.

• The provisional period for new KiwiSaver

members that have been automatically enrolled will be reduced from 3 to 2

• months. As many members are

unaware of the current process, a banner will be displayed on the member’s myIR account for the duration

• f the holding period to explain to

members what this means.

• Employer contributions (both

compulsory and voluntary) will be government guaranteed, allowing contributions to be passed to Scheme Providers as soon as information from an employer had been filed.

IN CONFIDENCE

• Interest calculations on KiwiSaver

employer contributions and employee deductions held by Inland Revenue will be calculated from the pay date the employer has reported.

• The three-month grace period for an

individual to gain New Zealand residency after being invalidly enrolled in KiwiSaver will be removed. If a person does not meet residency requirements, their account will be closed immediately. However, they will have the opportunity to re-enrol if, and when, they gain New Zealand residency. People with qualifying life-shortening congenital conditions will be entitled to make a full or partial withdrawal of their KiwiSaver funds before the retirement age of 65, which they are currently unable to do. So, as we’ve done with previous phases, we need to temporarily close down most of our customer facing systems and services while we implement the next round of changes. We have practised this closedown period, so we have a good idea of how much time is needed. Our priority is to have a stable system for customers and staff. Our temporary shutdown starts at 3pm, on Thursday 9 April 2020. From this time, myIR and E-File will be offline, as will our call centres and offices. All services will re-open at 8am on 16th April 2020. In arriving at this date, we’ve had to consider things like key filing dates, and – of course – minimising disruption for all of our customers. We’ve also tried to take advantage of the Easter public holidays. By closing over these dates, we hope to minimise the disruption for

• ur customers and limit the time our services

will be unavailable. Our website will continue operating, and you can continue to make payments from your own banks via online banking. We recognise that this is still an inconvenience, and we’ll try to limit the impact on you and your customers. Any returns due during the temporary shutdown can be filed on or before 16 April.

IN CONFIDENCE When we take these changes live, there are several mechanisms available you could use to can get in touch with us if you have any questions or encounter issues. I’m sure all of you know about the Top Solutions for tax intermediaries webpage. This is where we’ll post any issues encountered as well as the resolution to these issues. All the webinars conducted since October 2019 are available on our website, as well as the questions and answers, presentation packs and speaker notes. You will receive a Day 1 pack which will provide information on what you need to know to be ready for when these changes go live. We also have several newsletters like the Agents Answers which we’ll use to provide updates and share information. Then of course you can visit our Inland Revenue webpage, social media channels or talk to you community compliance account manager. We will be running seminars to help employers; tax agents and bookkeepers prepare for the upcoming changes. We’ll host 228 seminars for tax agents, businesses and not-for-profit organisations across the country. More specifically, seminars for employers will take place from 23 March – 3 April. And sessions for tax agents and bookkeepers will take place from 1 April – 8 April You’ll be able to find the link to register on our website so keep an eye on our website. That brings us to the end of the session. Thank you for participating today. We’d like to encourage you to complete the feedback survey that will pop up on your screen when the webinar ends. This feedback will help us get an understanding of the type of information you want to know more about in future. Just a reminder that we’ll provide answers to all the questions you’ve sent through today and make them available on our webinars page so check back here in a few days’ time. If you missed this session or would like to watch it again, it’s available on demand on the Transformation session of our website.

IN CONFIDENCE As mentioned, today was the final webinar for tax agents and bookkeepers in this series. We are developing shorter more focused webinar topics and you will be able to watch these on Demand on our webinars page in a few weeks’ time. We encourage you to keep checking the transformation section of our website on the address on screen. On this site you’ll also find links to previous webinars which you can watch on Demand and you can also view the questions and answers from previous sessions. We hope you’ve found this webinar series valuable, and we appreciate your feedback. That’s all from us. Goodbye