Making tax easier

Today the New Zealand Inland Revenue Department (IRD) launched a 6 week consultation process to fundamentally change the way it receives information from small businesses and individuals.

Over the next 2 years, it wants to transform a predominately paper based process to one which is entirely electronic. That means that all businesses and individuals will be required to submit their tax information electronically, either by themselves, or through an agent.

What is very important to note in this change is the IRD has seen the innovation and private sector investment being made in small business solutions. Under this proposal it is effectively moving from a ‘retail’ relationship with tax payers to a ‘wholesale’ one. It will work with a number of intermediaries who will provide these services and connect to the IRD.

A Public/Private sector partnership where all parties win

  1. The Government will save money
  2. Private sector solution providers can provide a more compelling service
  3. Small businesses and individuals will save time and money

Time is right for this initiative

  1. The use of the Internet is now pervasive
  2. There are private sector companies, like Xero, investing substantially in this market
  3. The upcoming wave of low cost netbooks and computers have made access to the Internet affordable

The IRD has been watching what has been happening with Internet developments and has proactively sought expert opinion from the industry. The adoption of FaceBook Connect on its website demonstrates that it’s in touch with changes in the technology world.

What is the impact?

  1. All small businesses are now forced to either work directly through their own secure space on the Inland Revenue website or work with an agent who is connected. If they are not yet using an electronic system they will have to.
  2. Small business solution vendors, especially accounting and payroll suppliers will have to substantially modify their software over the next two years

So this is one of the biggest changes to small business technology over the the past 10 years.

The role of the advisor

At Xero we believe that the secret to small business productivity is connecting businesses to advisors. As such our approach will be to put accountants and other advisors in the middle of this interaction. Xero will facilitate accountants and other advisers becoming agents for small business owners. This is a major opportunity for advisors to add more value and drive small business productivity across the country.

Xero has always seen an initiative like this as a natural opportunity that comes from a cloud computing approach to small business compliance. We are closely involved in the process with the IRD and will continue to invest in our accountant-centric approach.

The IRD is seeking feedback on its website.

8 Comments

Michael Gregg
June 9, 2010 at 3:17 pm

I’d prefer to simply submit all forms from Xero. From GST to PAYE to Provisional/Terminal. Copying numbers from screen to paper is just dumb. Heading over to the IRD site to tell ’em this now …

Blair
June 9, 2010 at 10:22 pm

I’m looking forward to the day where I can pull up a GST Return report in Xero, then click on a “submit to the IRD” button =)

Rod Drury
June 9, 2010 at 10:29 pm

Blair, the IRD is very aware of our request to do just that.

It could simply work by changing their online form to be a single HTML page that we can POST to, or even better a webservice.

The response from IRD is the current FIRST system is under such load that would be a high risk project to open that up to our volumes. It is useful feedback for you to tell them that you would like such a service so they can build their business case to do the work.

Rod

Blair
June 10, 2010 at 12:08 pm

Rod – sounds awesome. Will certainly get on there and give some feedback.

For one, it has always seemed insane to me that the IRD still needs to post out a physical GST Return paper, just so that I can get the code from the top of it to enter in to the online GST Return form. Surely they could at least just email me that code..

Looking forward to see what other ideas can come out of this.

Margaret Holmes
June 10, 2010 at 2:07 pm

The IRD have been allowing accountants to e-file GST returns from existing software for years – the really just need to open the door to everyone. While we love Xero for working with our clients and regular financial reporting, re-keying GST returns is a real drag. It is time for the IRD to move to the new age!

Vivien
June 10, 2010 at 8:24 pm

Imagine if on the Dashboard we were able have the option to view the IRD Statements/Balances for GST, PAYE, FBT, Income Tax etc and the date its due so it no surprise and then submitted to the IRD.

Jack
June 11, 2010 at 10:03 am

@Blair – Remember if you sign up for IRD online services, you can get your DLN code from there to do the GST return online.
I take great pleasure in throwing out (into recycling of course) the GST Return paper without even opening it!

Ben
June 15, 2010 at 3:24 am

Technology is certainly going to make tax compliance easier in the future, but there are options available now. Smart Payroll which Intergrates with XERO takes all the complaince haassle out PAYE. It is very simple to use, no more forms, very cost effective and all online alreadyand IRD approved. Good to see IRD working with companies like smart payroll and XERO to make things easier for us.

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