Do your own tax refund

NZ Accounting proprietor Michael Fresnel says people who want a tax refund can go directly to the Inland Revenue Department (IRD) website to fill out a form and get their tax refund.

However a lot of people are going to the well advertised tax refund websites which get people to give them their details which they pass onto the IRD - something people can directly do themselves.

"The sites make money by charging a percentage fee, so if you get a $900 refund, you might be paying $200 to the tax refund site when you could have done it for free in five minutes by yourself," he says.

Many people use tax refund websites because of the commonly held belief that if you approach the IRD you may also have to pay tax that you owe.

However the IRD has an electronic calculator online where people can work out whether they’re due a tax refund for a certain year, or whether they owe the IRD money, and it is the individual’s choice whether they let the IRD know either way.

“Individuals can go online, make the calculation and walk away if they want to. We do not have a system whereby we’re tracking the individual and their activity on the website,” the IRD says.

It also strongly advises that people using tax refund companies read the small print before they hand over any personal details to a company.

For example www.taxrefunds.co.nz and www.mytax.co.nz charge 12.5% of the tax refund to a maximum of $500 and myrefund.co.nz charges on a sliding fee scale with a maximum of $500.

mytax.co.nz says "our average tax refund is around $478 dollars, but often people receive thousands. Around 76% of our applicants receive tax refunds".

myrefund.co.nz even says that the IRD suggests you speak to an accountant or tax agent such as themselves.

Chief executive of taxrefund.co.nz Adair Craik says the main difference between its website and the IRD is that it provides a free estimate of the tax refund.

"One of the incentives for people is that we're not the IRD. Some people are apprehensive about dealing with the IRD and we help with that stress."

Craik says taxrefund.co.nz has 430,000 people on its database and the average refund is $250 which they get $25 from.

She says many people are not sure about what they should include in their application, what expenses they should claim and whether certain income should be included.

However the IRD annual report says it has made it easier for customers to self-manage their tax affairs.

"We have stepped up the promotion of online services while developing new services for families, individuals, businesses and intermediaries that make it easier for them to access and manage their tax affairs online."

The IRD says people just need to go to its website, www.ird.govt.nz, where they are guided through the process from the front page.

"I'm making an instruction manual that can be downloaded to help encourage people do it themselves," he says.

Comments from our readers

On 6 November 2009 at 8:18 pm Richard said:

It's true, all these tax refund companies are basically scamming people who are fearful of the IRD. The IRD needs to raise its' PR game so people are not fearful. I have had great service from the IRD over the last 2 years, but admit I was initially concerned that they would be difficult to deal with. They are not. The old IRD has gone thank God.

On 6 November 2009 at 9:47 pm Matthew Underwood said:

So far you have all missed the point! The big advantage that these firms offer is the optionality of the enquiry. The PAYE system can give overs and unders. If you approach the IRD directly then sure you can get what is due to you, but you also HAVE to pay anything that is owing by you to the IRD. If the IRD were to remiove that element of what could be called "miserableness" in their policy maybe the public refund firms woudl disappear over night. IRD's Catherine Delore does not promote an informed debate when she leaves this out of the discussion. To be clear, an IRD agent such as these firms can ask for the earnings information without triggering a tax demand for what is owing. An individual acting for themselves who asks the IRD for their earnings infoprmation will have to pay any tax that is owing. That is the whole debate.

On 7 November 2009 at 7:59 am Ron Peek said:

It's Matthew Underwood who's missing the point. Anyone who can fill in a betting slip can fill in a Tax Return (downloadable completely anonymously from the IRD) and calculate their payment/refund. If they can't be bothered, or haven't kept a note of what they've earned, and want some scam merchant to charge them for their laziness, let them go ahead. Against stupidity, the gods themselves contend in vain.

On 12 January 2010 at 4:10 am Bert McAllistair said:

Ron thats a pretty harsh view on things. Going through the IRD when you have no experience with them or if you lack a well documented record of your earnings can be stressful! I am one of those lazy people you speak of, but because the fee they took from me was so low, i really didn't care that I was being "scammed" by the agent I went through. A $30 fee on a 200 and something return really doesn't seem too bad when it only takes you 5mins to fill out the form on these sites! I'm sure some companies are probably dodgy but I did mine with kiwi refunds and they were awesome. So all I can say is that if you know what you're doing, definitely do it yourself! But, if you're like me then just chill and get someone else to do it and not worry about the IRD taking your money.

On 21 February 2010 at 1:14 am Geoff Carter said:

A website has just been launched that offers the same service but for no fee whatsoever. They draw all their revenue from alternative sources. [url]www.refundnow.co.nz[/url]

Comments from our readers

Add your comment: