IRD is glossing over problems with its new tax system, fears Auckland accounting firm

Tuesday, 28 May 2019

An Auckland accountant has listed a variety of problems with Inland Revenue's new income tax system, which he says is not the 'full success' the department has claimed.

Inland Revenue did not appear to dispute the concerns but said the problems the accountant identified were not widespread.

John Weston, of Weston & Associates, said the Glenn Innes firm had encountered a range of problems since Inland Revenue implemented a key stage of its $1.6 billion Business Transformation initiative last month.

These included Inland Revenue calculating interest charges and loss balances that were carried forward incorrectly and issuing tax refunds when more information needed to be supplied to the department.

He said the firm could also not access student loan balances online or access company imputation balances.

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Some of the problems were serious, he said.

'We have one client that had to do a 'voluntary disclosure' covering four or five years and I think all of the interest calculations were wrong.'

In another case a client was charged $10,000 in penalties for the late payment of tax when they had subscribed to a tax pooling service that should have offset any debts, he said.  

Weston said he had spoken to a couple of other accounting firms which had reported similar issues and did not believe all the problems, such as incorrect interest calculations, could be isolated incidents.

'They are relying on a computer system so it is not a manual calculation.' 

Other accountants and taxpayers have come forward with separate concerns.

Auckland accountant Melanie Gabriel has said her parents, in their 70s, were incorrectly told they owed more than $10,000 in tax, penalties and fines by Inland Revenue, after the new income tax system did not take into account provisional tax they had paid.

Weston said the problems his firm had experienced 'could be worse' but he felt that Inland Revenue was 'glossing over the results by calling the change a full success'.

His staff had had to put in many extra hours of work and Inland Revenue's support staff had not known the issues 'or what to do with them', he said.   

Inland Revenue spokesman Baden Campbell responded that the matters raised by Weston were 'of the kind that have already been reported to us by tax agents and accountants'.

'These are the sorts of things we expected to be dealing with,' following the upgrade, he said.

'They don't represent major system failure and we're still not faced with anything where the impact could be described as widespread or ongoing.'

Instead, the new tax system was performing its 'primary functions' better than Inland Revenue had expected, he said. 

'We knew there would be creases that needed to be ironed out and tax agents are proving to be great and patient partners in helping us do this. Their feedback is important to us and we're grateful for it,' he said.

Baden said a concern that Inland Revenue's new system was incapable of handling investment accounts that were associated with more than one IRD number was misplaced.

'Customers are able to go into myIR, update their income information and split it correctly.

'Next year, this process will happen automatically once we start receiving more detailed information from financial institutions,' he said.

Have you had good or bad experiences with Inland Revenue's new tax system? Contact tom.pullar-strecker@stuff.co.nz. Comments on this story are now closed.