The Government is proposing changes to how Inland Revenue manages Working for Families, Child Support and Student Loans. The proposed changes would make them easier and simpler for New Zealanders. They would give people more certainty that their payments are correct and payments would better reflect their current situation.
This is part of an overall modernisation of New Zealand’s tax administration system.
Inland Revenue administers Working for Families, Child Support and Student Loans, even though they are not taxes. The upgrade of Inland Revenue’s computer system is an opportunity to improve how these payments are managed.
The proposals are not about the fundamentals of the payments themselves. The proposals are aimed at better administration of the payments so more people receive or pay the right amount at the right time.
The proposals outlined in these pages are grouped into four areas. They would make it easier for people who receive Working for Families, pay or receive Child Support or repay a Student Loan by:
- improving the certainty, accuracy and timeliness of payments by using more recent, actual income information
- preventing or minimising debt from missed payments or overpayments of entitlements
- aligning and updating common definitions
- improving outcomes for people with unusual or exceptional circumstances.
While the main focus of the proposals is on Working for Families and Child Support, some also apply to Student Loan repayments for some domestic borrowers.
The changes would help people to be certain they were always getting or paying the correct amount, and would remove worry about going into debt. Families would get the right payment when they need it, and not have to wait until the end of the year to find out if they had not received enough or had received too much.
People will have different views on these proposals. For example, some people will prefer to get the same payment every time even if the payments do not always reflect their current situation. Other people may prefer payments that quickly adjust whenever their circumstances change. This is why it is important that people send in their own personal feedback.
These proposals build on improvements already underway
The Government has introduced the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill which proposes various improvements, including the potential for Inland Revenue to have more up-to-date information about people’s income.
These improvements resulted from earlier consultations in the Making Tax Simpler series on Investment income information , and Better administration of PAYE and GST.
The Bill will go through the usual Parliamentary process and will become law when it is passed. This is likely to be in 2018.
If the Taxation Bill becomes law, from 1 April 2019 employers would tell Inland Revenue more regularly about their employees’ income and tax deducted. Financial institutions, such as banks, would provide more regular information about the income earned and tax deducted from people with savings or investments.
With more accurate and up-to-date information about people’s incomes, and a modernised tax administration system, Inland Revenue would be better able to make sure that people are getting the correct amount of Working for Families payments and that Child Support payments are assessed on more current information.