22nd July, 2019
With representatives from both Australian and New Zealand tax departments speaking this August at MYOB Partner Connect 2019, we wanted to find out if there are any clear distinctions between the two jurisdictions.
MYOB Partner Connect 2019 is just around the corner, and for the first time this major accounting and bookkeeping event will combine the best inspiration and insights from both Australia and New Zealand into one massive conference. For bookkeepers and accountants who operate or are considering operating in both countries, MYOB Partner Connect may be the event that guarantees your success.
That’s because not only has MYOB invited international keynote speakers and specialist advisors to share their wisdom with the audience, they’ll also be hosting talks from members of the Australian Tax Office (ATO) as well as New Zealand’s Inland Revenue Department (IRD).
As such, we thought it would be the perfect opportunity to discuss some of the key issues in taxation that have arisen in both jurisdictions, and examine the differences that remain.
One of the most obvious similarities between Australia and New Zealand in 2019 has been the move towards online payroll reporting, which sees employers lodging information regarding salaries and super with their relevant tax authority on a regular basis.
In New Zealand it’s called Payday Filing, and it became mandatory on 1 April this year, while in Australia it’s known as Single Touch Payroll, and it came into force as of 1 July 2018 for employers with 20 or more and 1 July 2019 for small employers.
Gone are the days when employers would collate this information once a year (often in a panic lasting multiple days), pay out any outstanding super and send all the information in one big hit.
As Sharon Thompson, deputy commissioner for Customer and Compliance Services at the IRD says, this change is in step with a number of changes designed to integrate tax into “regular business processes”.
“For example, you can now file your GST return straight from your accounting software or send us your employment information direct from your payroll software at the same time as you are paying your staff,” said Thompson.
For the ATO’s acting director for Policy, Admin and Content in STP, Angela Lehmann, these changes mean greater efficiency for employers, and greater transparency for employees.
“STP is an Australian Government initiative that was introduced to streamline business reporting obligations and create transparency for employee entitlements,” said Lehmann.
“For the first time ever, employees are able to track their tax and super position throughout the year to avoid large end of year tax debts and ensure they are receiving their super entitlements.”
In news released earlier this year, the IRD appears to have taken a proactive leap by providing taxpayers with an ‘automatic tax assessment’, with the first batch occurring in May this year.
An automatic tax assessment is exactly as it sounds: the IRD is starting to assess the tax positions of New Zealanders without requiring them to lodge for a return.
“We want to make the tax system as straight forward as possible to help our customers meet their obligations and receive their entitlements,” said Thompson.
“Listening to that voice of the customer and designing our systems around that has been a huge part of our transformation over the past few years.”
When it comes to the individual taxpayer, Thompson explained, that means asking less of them.
“We now send out automatic tax assessments, which means if someone is due a refund and we have their bank details, we’ll put it straight into their account.”
But it also means if the taxpayer owes the IRD, they’ll be hearing about that, too. Either way, the burden of compliance in terms of collecting, collating and communicating data between the individual, their tax agent and the tax department has been massively reduced.
“Our customers and our intermediary community are at the centre of everything we do, and we want to help them get their tax affairs right from the start.”
At the halfway point, the IRD’s automatic tax assessment system had refunded more than NZD$300 million to taxpayers.
Whether it’s online payroll reporting, automatic tax assessments, or ongoing tweaks and changes to tax settings, there’s one constant at play on both sides of the Tasman: the ongoing evolution of technology.
“The digital world is changing rapidly,” said Lehmann. “So, too, are the ways businesses are interacting with one another and with us.
“The government needs to mare sure they’re aligning their processes to remain on the front foot with these interactions and make it easier for the community by streamlining government services.”
An increasing number of businesses are using advanced financial reporting systems from an early stage, and this is prompting both Australia and New Zealand authorities to up their digital skills.
“Technology has disrupted many industries and tax is no different,” Thompson said.
“Our customers are the big winners from this development, as we’re now able to get a more accurate picture of their tax position and make smarter interventions when it appears they’re going off track.”
And technology is also working to create better connections between software providers, their customers and the government as well, with both the ATO and IRD working hard to provide real-time connectivity to their respective databases.
“Software providers now have a direct link to the back-end of the tax system, so we can integrate tax with regular business processes and customers can complete more tasks from the one place,” said Thompson.
And, she says, the ongoing evolution of digital technology also offers opportunities for intermediaries to expand their offerings.
“It’s amazing what you can do when technology provides you greater access to real-time information and gives you the time to better tend to your customer’s needs,” she said.
“We’re seeing new innovations all the time from intermediaries in New Zealand and we’re proud our new tax system has helped facilitate some of it.”
Want to find out more about how attitudes and legislation differs from one tax jurisdiction to the other? Come to MYOB Partner Connect 2019 to hear from the ATO, IRD and many more experts in the field. Book your tickets today!