At present, most individuals have very little to do with the tax system.
More comprehensive and accurate information received about customers’ income from streamlined PAYE and withholding taxes will allow for a fundamental review of how individuals deal with the tax system in the future.
New technology presents the possibility of Inland Revenue receiving accurate income information from employers and other payers of income, allowing Inland Revenue to provide an individual with a secure online ‘tax statement’ showing those income details. This could include merging of various tax interactions in one place (for example including donation rebates). The key would be to make that interaction as simple as possible.
The only action required for the vast majority of customers would be to check and confirm details. Some people would also need to report other income received, such as overseas income, where there was no tax deducted at source.
Refunds and any underpayments of tax could be made or recovered automatically based on better use of technology.
Providing a tax statement online and requiring taxpayers to check the information, is a departure from the current approach to keep as many individuals from actively interacting with the tax system.