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Business accounting systems interacting with Inland Revenue

Do you support linking business accounting systems to Inland Revenue?

The Government proposes that business accounting systems be able to interact with Inland Revenue systems directly. This would remove the need for people to take information out of their accounting system and enter it on an electronic or paper GST return. It should reduce the effort and time spent on filing GST returns and also some sources for errors and problems – Inland Revenue receives a lot of returns which are incomplete, contain errors, or are unreadable. This creates extra work for both Inland Revenue and those who filed the return.

The Government thinks the process should not be fully automatic, but be a deliberate step requiring the person operating the accounting software to click a “submit GST information to IR now” step. This will ensure they have the chance to check the information is true and correct before it is submitted to Inland Revenue.

A significant number of GST-registered persons use third parties, such as tax agents, tax advisors, accountants or bookkeepers, to help them with meeting their GST obligations. Generally, the proposal is expected to provide the same benefits to third parties submitting GST information on behalf of their clients as they will for GST-registered persons themselves.

Questions

1.  If you could submit GST information directly from integrated accounting software in the way described above, would this reduce or increase your compliance effort and costs?  If you can quantify the amount please do so.

2.  Are there additional issues which need to be considered when thinking about how the proposed new digital services would work for third parties, such as tax agents, tax advisors, accountants and bookkeepers, in relation to the provision of GST information?

Comments

Rose Lee
I support filing from software in principal, but what I occasionally find happens is that I will have missed entering a purchase or invoice to the system, and don't pick it up till I reconcile my bank statement for the following month when the payment appears. Currently I can do an adjustment and then submit the return, but I don't know if the software is smart enough to pick up a late adjustment and I wouldn't know how to program it for that kind of change. That would mean any adjustments are likely to have to wait until the end of the year when my accountant checks it for me. I'm only a small business, so we're unlikely to be talking big money, but I do get anxious when things are wrong and I don't know how to sort it out.

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8 months ago
Susan Moyle
Yes, I agree. When you are the sole person in this role it can make you a bit anxious (there is no-one in my office who would know what they were looking at to ask to check my figures and entries before pushing the send button). Our software does pick up adjustments when I make them in the next month, but would IRD then start to penalise for honest mistakes (as they would show up as adjustments from previous periods)?

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8 months ago
Miles
I agree completely - our return always has a a few small adjustments, some of which have to be made manually. We use software but it is not faultless. For example, any time we purchase goods from overseas we have to make a manual adjustment to the return as our MYOB software does not correctly classify the GST paid on an import (for which the GST is paid to Customs) when the goods are being purchased from a vendor who is not collecting the GST. The process of filing also is a check-and-balance system for us of correcting duplicate/missing entries and finding mistakes before they are reported; from everyone else's comments on here and my own experience, it is far preferable to fix the problem before it is reported rather than have it automated, and try to communicate any changes to the IRD after the fact.

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8 months ago
Graham Sharp
You can still do your adjustments. The GST Return will not be submitted automatically from your accounting programme. You can still prepare it and sit on it and check it at month end as you say, and then only export the finished return to the IRD when you are completely happy with it.

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7 months ago
Simon Garner
The proposal that GST returns could be done through accounting software - we have a small business and would be opposed to having to run accounting software

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8 months ago
Joyce Glennie
I agree with Simon. We also are only a small firm. I would NOT want to see a compulsory accounting software. I'm happy with the way things work now. I prepare our GST online throughthe IRD website, and I'm happy doing that. I feel more secure with our accountant checking everything at the end of each financial year. I think any proposed change for GST administration should be optional. We have enough to worry about, without having the extra burden of additional accounting software. Joyce

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8 months ago
michele hunt
We are in the same situation and I agree absolutely. my IR GST returns are easy to do and work for us.

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8 months ago
Sandra Clifton
I also have a couple of small businesses, I run simple cashbooks it costs me nothing to maintain and my payroll is small & manual. I certainly don't want any compulsory accounting software. I'm actually really happy how IRD has GST online now. Payroll could be on just one form and it would be good if IRD sent out reminder emails for PAYE just link they do for GST.

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8 months ago
Lloyd Olivecrona
Joyce has hit it on the head exactly. I am very happy submitting GST returns on-line with IRD. I think the service works well. We are only a small firm and don't need our own accounting software for GST. Our accountant provides an efficient service with the preparation of end of year accounts and returns. Make this optional for those larger businesses that can justify the effective use of appropriate accounting software.

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7 months ago
satya G R Josula
I too agree with your comments since I have a small firm . I opine that any proposed change of GST /PAYE administration should be optional . The reason the cost of the software and support .. the small clients always differ with the cost and they always feel the burden that too much fees on them .

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7 months ago
Sherida Lee
I have no need to run accounting software & prefer to use an accountant, it actual reduces my workload & I know things are being handled correctly. Costing my time at a reasonable level an accountant saves me money.

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7 months ago
Lynley Bolland
I agree totally with everything you say. We are in the exact same position.

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7 months ago
Jim
Agree - absolutely. I've put effort into setting up a system that works for my small business. Even if stripped down accounting software were available for free, the cost of learning that software and setting it up so that it fits my operation would be a burden. I support the idea in principle. Just don't make it compulsory. See if you can convince a software company to provide suitable software with basic functionality to offer freeware. Let people migrate to this method when and if it suits them. Provide online training.

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7 months ago
Christelle Savry
Fully agree. I don't use an accounting software for our small business and certainly would not want to be forced to. My twice-yearly GST returns take me 5 minutes to file online and this method of filing suits me fine. Linking accounting systems to IRD may work well for some larger businesses but it should be optional, not mandatory.

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7 months ago
Graeme Young
We run a small business that by it's nature does not require us to have third party accounting software. Our transactions each month are minimal and are easily dealt with without having to use MYOB, Xero etc. I agree with the option of having a protocol to allow companies to file GST returns to the IRD via third party providers but believe this should not be made mandatory. To do so would mean that costs for a small business such as ours would increase unnecessarily.

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7 months ago
Jason Tan
Whether you're running a small or big business why wouldn't you be running accounting software. For me it's been a great time saver and if it links direct to ird that can only be a good thing.

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7 months ago
Linda Green
For the sake of your business why wouldn't you be running accounting software to aid with budgets, end of year etc. Keeping everything on track.

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7 months ago
Cheryl
I agree with Simon. I run a small business off a simple cashbook with my accountant doing my end of year books. I file GST online with IRD now, and it works well for me. For businesses like mine we shouldn't be forced to introduce accounting software to file IRD returns.

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7 months ago
Jenny
We are a tiny new business with only one client and that is likely to be how we remain. The cost of using an accounting program doesn't seem justifiable for us. Our transactions are all very straighforward. I do our GST online. It would be a great option for some businesses but there should be another option too.

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7 months ago
Lenard
Same here: Sole trader, 6 monthly gst, 4 monthly provisional tax, no PAYE. So don't need accounting software, and no tax agent either. Keep it simple for those running a simple business please!

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7 months ago
David Williamson
Increase the cost. There are often a lot of adjustments outside of the accounting system including personal adjustments, purchase and sale of fixed assets on credit etc

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8 months ago
Haydn J
I think it would be a good option, and save some double handling of information. Provided it stayed as an option, and was not compulsory.

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8 months ago
Susan Moyle
Yes, I agree. It could maybe be made compulsory for businesses over a certain size, but will add to cost for smaller businesses and many non profits

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8 months ago
Charles
Unfortunately despite many SME's using excellent software like Xero, simply feeding from there direct to the IRD without an independent review, such as by an Accountant, will likely cause headaches for all concerned. In my experience many SME's regard keeping their accounts straight as a chore often left to the last minute and its not usually something they focus on to get even 90% correct.They don't necessarily have the skills nor inclination to get it right and see that as someone else's problem to finesse, namely the Accountants problem to sort.

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8 months ago
Graeme Noble
I am an independent contractor or one man band, and am very happy with how the system works now. So if i could continue entering the information and paying the GST directly from my bank account that would be great, or would be OK with IRD debiting the GST from my bank account after i had submitted my GST and enabled debit for the current return period. How i keep track of my GST: I use a bespoke database and run a simple ledger, and enter every transaction into this, these transaction line up with my bank statements or sometimes cash. I run report for the two month GST period and it gives me three numbers. Money collected for GST, purchases for GST, difference which is normally amount owing. I enter two numbers into the IRD GST form along with some zeros and it shows me the difference, which should be the same as my calculation, this is a cross check that i have entered the values in correctly. I then go and pay the amount owing using online banking. One change could be as suggested automatically direct debit the GST money from my business bank account, but there needs to be a method of allowing this or not for each return, for cash flow reasons. For me the process is simple and if i had to use other software it would make it more complex and costly, so my choice is for the current interface method to be maintained. And in addition for a file i.e. CSV file be used to submit GST information. I hope that what is being meant by interfacing with accounting software is that accounting software will generate a file that is submitted to IRD.

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8 months ago
Don
We use Xero software and at the end of each two month GST period I simply run a GST report. As well as a detailed report on all GST transactions, it shows me the figures I need to enter into the GST return on MyIRD. The whole return process only takes me about fifteen minutes every two months, but I like the idea of being able to transmit the data to IRD direct from Xero.

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8 months ago
Joy
Definitely not. As a small business with two employees we dont have payroll system. The cost of compliance would be huge.

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8 months ago
Shona
I agree. Experience shows that it's not only the cost of the software itself that can be disproportionate for the small business owner but also the amount of time required to learn how to use it. It could well be a time saver for larger businesses and, therefore, they should have the option but my one-person with occasional casual employee business is so simple that i suspect compulsory software would involve many features I wouldn't need but might have to learn in order to figure out I don't need them. I applaud IRD, however, for the improvements it's made in recent years with online forms, calculators and easy direct payment arrangements, which have been effective time savers for me.

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8 months ago
Shona
I agree. Experience shows that it's not only the cost of the software itself that can be disproportionate for the small business owner but also the amount of time required to learn how to use it. It could well be a time saver for larger businesses and, therefore, they should have the option but my one-person with occasional casual employee business is so simple that i suspect compulsory software would involve many features I wouldn't need but might have to learn in order to figure out I don't need them. I applaud IRD, however, for the improvements it's made in recent years with online forms, calculators and easy direct payment arrangements, which have been effective time savers for me.

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8 months ago
Peter Graham
We are a very small business and use our own software for accounting purposes. We do not oppose the proposal for others to use commercial software to send data to IRD, but oppose any requirement for it to be mandatory. We would be required to purchase commercial software and spend considerable time to learn it. This would add HUGELY to our compliance costs. We avoided the need to transfer from paper to electronic submission for a long time and have now got used to the current online system (although it is not intuitive and very difficult to correct mistakes). We don't want to have to learn new software and new systems to make it easier for IRD--it will NOT be easier for us. Our system has worked for us for over twenty years and is still very adequate for our business.

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8 months ago
Craig
I think that this is extra compliance, for small businesses who use manual or simple cashbooks this will increase unnecessary compliance and costs without any great benefit to the businesses or inland revenue.

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8 months ago
Karlee Fox
I understand the thought process in trying to make preparing and paying GST from your accounting system a good idea on the surface, but for us it would not work at all. I actioned our GST return from not only our accounting package but also our vehicle program so this would propose a problem. Also within our accounting package I have two separate entities which then make up one company/GST number so that may also post a problem. I heard a saying years ago and live by it - 'change is good but not for the sake of change' it has to be a benefit for everyone and unless it was not compulsory feel this would be hard to ensure all business types/size and shapes can accommodate this change. Well that's my two cents worth :-)

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8 months ago
Fiona Cargill
I strongly believe that filing from software should be avoided! The reason for this is that there is always some kind of reconciliation and adjustment to make when it comes time to file a GST return and certainly this is what bookkeepers and accountants would need to do. This may be a simple case of information being recorded incorrectly but if the information has already been sent it increases workload by trying to put it right. This would be a situation were too much automation will cause more problems than it's worth.

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8 months ago
Grant Collingwood
No I don't because the process is not the problem. The problem with the PAYE system is not the method of filing, it is all the extra stuff that goes into calculations that make this process horrendous. Student Loan repayments, Kiwisaver deduction for employer and the employee percentage deductions, esct and so on. What make it worse is the IRD know all the calculations, but they make us do it first, then they tell us when we get it wrong. If they know it all, then why don't they just do the calculations and tell us a single figure to pay each month.

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8 months ago
Susan Moyle
I process a lot of small payments for casual employees for a small non profit. I use the IRD calculator to do this and it works really well, but we do not use payroll software and this would greatly increase the costs involved for everyone. It is difficult enough getting them to supply their KS rate, IRD number, full name, etc. This just seems like one more thing. What would be great is the suggestion of IRD supplying employers with all the info on new employees. If this just required one form rather than the many that seen to be needed currently that would be great.

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8 months ago
Ralph Behrens
Couldn't agree more, particularly in regard to employer contributions and esct. This is the most cumbersome part of filing PAYE online and yet it should be the most simple calculation for IRD to do automatically. Why the extra form to fill out?? It annoys me that IRD don't appear to make a lot of effort to streamline some of the processes that would save a lot of precious time for small businesses.

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7 months ago
Joanne
This would not work for my business, as we run separate systems for client funds and operating expenses. New software that would enable automatic GST reporting would be hugely expensive for us and not worth it. It may be a good idea for bigger businesses where the cost impact is not so great.

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8 months ago
Nick
Absolutely support this. Having to double enter everything only wastes time and doubles the chance of human error. Obviously this only needs be an option for those willing to use it rather than making it the compulsory form of submitting returns.

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8 months ago
Paul G
Agree. We run 16 gst returns every month (some big, some small). The accounting product (Xero) produces these for us. Then we have to manually enter these into the IRD website, increasing time and increasing the likelihood of mistakes. It's also frustrating and archaic. The whole system feels like moving from the 2010's back to the 90's. Also, while I'm here - IRD. Faxes? Really?

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7 months ago
Lyn
I would like to see the system remain optional. Not all accounting software gets GST correct - especially in retail where you can have two programs running together and the information gets confused. It is good to be able to manually check the figures before sending them to IRD. The current system where figures are taken from software and entered into the IRD website works efficiently and effectively. I would NOT like to see it compulsory to send GST figures and information straight from an accounting package to the IRD.

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8 months ago
Gary
Well you could hardly make it more complex for your unpaid tax collecters. Who is going to pay for the soft ware? I use the paper tax deduction tables. I initially used the website but as the website was changed it became quicker to get out a book. I would expect that the website will not be user friendly going on past history--you could prove me wrong! This e mail is not abusive, only honest therefore if you truely want open discussion & are not just going through the motions I expect to see this coment.

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8 months ago
Tanya Cameron
I don't think it is a good idea to send the information direct from the payroll program, as there may be some changes to where the data input person has chosen to put data

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8 months ago
Margie
Integrated accounting software would definitely increase our compliance costs and effort for managing GST - this is NOT an affordable option for our small business. The current system allows for adjustments from our accountant and is very easy to use. It definitely should NOT be compulsory to have an integrated system.

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8 months ago
Ross Simmonds
I totally support the concept of integration with business systems, and indeed any attempt to further streamline digital processing and move away from paper based systems. However, with respect to Payroll integration the proposals are likely to add cost to small businesses who currently use the free Thankyou Payroll system - I imagine that this service will become redundant with direct integration and the IRD subsidy upon which Thankyou Payroll operates will dry and consequently small businesses will be forced to move to a paid system.

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8 months ago
JJ
Thanks Ross for mentioning Thankyou Payroll, I hadn't heard of it and as I work for 3 SME's they all could benefit from it!

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7 months ago
Judy
Currently our accountant deals with GST, end of year etc, but all other accounting - wages, invoicing, etc - is dealt with in house, using our own system. I would have to purchase expensive software, compatible with our accountant & IR, & learn to use this. So far any software I have looked at has been expensive, complicated, & does not meet all our requirements. Although all this information is already sent to IR, I do feel that this is a bit like "Big Brother is watching You!!!". I do like to feel I am in control of my business, not a government department.

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8 months ago
Lisa D
I think it's a great idea - there are some really simple pieces of software available to clients of varying sizes - from the very small to the very big. And they're priced accordingly - from the very cheap to the very expensive. Even with smaller clients who have few transactions we like the cashbooks as it reduces their/our time spent on processing data (and our fees accordingly - data all has to be processed at the end of the day), but provides easily accessible history and simple 'click of a button' reporting. Nowadays, manual processing takes us much more time and costs more to process GST returns or annual accounts, so we rarely do it. We find manual tracking of payroll with all the requirements needed to track kiwisaver and holiday pay to actually take more time than using a payroll system - even for two people. The payrolls we process are all electronically uploaded to the IR through IR-Filing, so we do some as it is. Perhaps there's a bit of education required for the very small businesses in ways they can improve their business efficiencies leaving owners to spend more time doing the things that matter to run their business. Most accountants have a lot of options available to them - it's worth asking them what they can recommend.

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8 months ago
Sandra Pooch
As a small business with an older accounting package that meets my needs very well it would be a significant expense and hassle to upgrade simply to do a gst return.

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8 months ago
Delwyn Shaw
It would be very useful for accounting software to have the option of filing GST returns direct with IRD - but it should be optional not compulsary

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8 months ago
David Seifert
At what stage do you envisage software system sending GST information? Our GST return is currently on a payments basis however until our bank statements are reconciled (received twice monthly) we cannot be sure any errors are corrected. Our software would therefore have to detect when the last statement for the previous month was reconciled before generating a GST return. Monthly GST reporting & payments would smooth cash flow & be beneficial for our business.

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8 months ago
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