The Government recognises that not all customers will be able to use digital services. However, because tax administration is funded out of government revenue, everyone bears the cost of administration. This means customers who can file online but choose to use paper impose unnecessary costs on society.
Large payers in particular may be required to file online to ensure the benefits of an improved withholding tax system are realised. For example, social policy entitlements during the year would not become more accurate if paper filing for large payers was permitted, because of the time it would take to process the information.
There are several options for encouraging online filing:
- optional paper filing for all payers, subject to a review after a set period of time, or until a set future date after which online filing may be required; or
- online filing for larger payers only, for example those with more than a certain number of recipients they pay investment income to, or
- online filing for all payers, with some exceptions, for example for those who don’t have access to digital services.
The second option would require a threshold to be set. This would involve balancing the Government’s desire for earlier investment income information in a digital format with smaller payers’ concerns about accessing digital services. The Government welcomes feedback on these options.