Tax Remedial Matters

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The Taxation (Annual Rates for 2018-19 Modernising Tax Administration and Remedial Matters) Bill contains a number of proposed changes to modernise and improve the administration of tax.

The Bill includes amendments in the following areas:

1. Ensuring individuals are taxed appropriately throughout the year.

The IRD will monitor the tax codes used by employees and the withholding tax rates used by individuals for investments such as interest income. The IRD will notify the employer and or the individuals where an unsuitable tax code is used and request for the rate to be amended. This proposal aims to reduce an individual’s year-end tax liability.

In addition, under this proposal, the current “special tax codes” will be replaced with “tailored tax codes” to suit individuals with secondary and investment income. This proposal aims to provide a suitable tax rate which taxes individuals on multiple sources of income. This would go on to reduce the cash flow burdens that secondary tax codes can impose on individuals.

2. Donation Tax Credits

The bill will also introduce changes to simplify donation claims. Under the proposal, donation receipts could be submitted throughout the year and the submissions could be made electronically to reduce the paper work. All the donation receipts submitted throughout the year will be automatically accounted for in the annual tax claim and individuals will not have to fill in a separate annual claim form.

Joanne Whyte