Date posted: 9/03/2020 5 min read

A high bar for cheque exemptions

As of 1 March, taxpayers need the Commissioner of Inland Revenue to grant an exemption if they need to continue to pay their taxes by cheque.

In Brief

  • A high bar for cheque exemptions
  • Compliant taxpayers need to be supported
  • Other payment methods are available

A high bar for Cheque exemptions

Taxpayers who wish to pay their taxes by cheque will need an exemption from the Commissioner of Inland Revenue after 1 March.

While ACC and NZ Post have also ended the cheque era, Chartered Accountants Australia and New Zealand is concerned the change will alienate compliant taxpayers who would otherwise be meeting their tax obligations.

We shared our concerns with Inland Revenue in our submission on the December 2019 draft standard practice statement, "Tax payments – when received in time", and in meetings, as well as passing on the feedback and experiences of members.

While we acknowledge that cheque usage is declining, we were disappointed with the implication in the final standard practice statement on tax payments that was released in February that a high threshold had been set for taxpayers to qualify for an exemption.

Members have expressed concerns about what this change means for their clients, particularly those wishing to retain their financial independence and who may be uncomfortable transitioning to other payment methods.

In our view, compliant taxpayers need to be supported in a practical way to continue to meet their tax obligations. While other tax payment methods are available, the alternative methods should be ones compliant taxpayers are confident and comfortable using.

Requesting an exemption

While this change applies from 1 March, taxpayers who have previously paid their taxes by cheque need to be prepared for upcoming tax payment deadlines.

  • GST returns and payment due 28 March
  • Income tax, Working for Families Tax Credits and student loans due 7 April
  • GST and provisional tax due 7 May

Taxpayers who feel that they need to continue to pay via cheque can request that the Commissioner grant an 'exceptional circumstances' exemption.

As the name suggests, this is a high standard to meet and taxpayers will need to explain why they cannot use other payment options. In our submission to Inland Revenue last year, CA ANZ questioned whether the bar would be determined by whether it was impossible for taxpayers to pay by other means, or not practical for people to pay by other means.

While CA ANZ has not had an explicit answer to this question, feedback from our members suggests practicality is not enough. These exemptions are granted on a case-by-case basis.

These requests can be made to Inland Revenue by telephone, SecureMail, post and by face-to-face appointment. Inland Revenue advises that requests made online or by post should include a phone contact so that Inland Revenue can contact taxpayers to discuss what other payment facilities their banks can offer them, as well other forms of payment.

If tax agents are making requests via SecureMail, a detailed explanation of the other options explored may help to smooth the process.

As Inland Revenue is likely to want further information, there may be a delay in a decision as to whether an exemption will be granted. Therefore, it would be prudent to keep the upcoming tax payment dates in mind and make an application as early as possible

What other payment methods are available?

Payment options available to taxpayers are outlined in SPS 20/01: Tax payments when received in time.

Payment options You'll need

Pay online in myIR
- debit or credit card payments, or

- set up a direct debit (immediate payment or future dated)

www.ird.govt.nz/myIR to login or register

IRD number
tax/product type
payment period

Authorise IR to take direct debit payment from bank

Pay on our secure payment website
- debit or credit card payments tax/product type payment period

www.ird.govt.nz search 'make a payment'

IRD number
tax/product type
payment period

 

Pay using internet banking

IRD number
tax/product type
payment period

Authorise the bank to make one-off or regular payments

Pay through Westpac (you don't need to be a Westpac customer)
- EFTPOS or cash

- Use Smart ATM (Westpac customers only)

Counter payment
- IRD number
- tax/product type
- payment period

- barcode (off return or IR statement) or create your own at www.ird.govt.nz/barcode

Pay through your bank
- phone or visit your bank to discuss options
- examples, direct credit, automatic payment* and phone banking

* Automatic payment allows for 2 people to sign, one-off or regular payments

IRD number
tax/product type
payment period

Pay IR by phone
- credit and debit card
- domestic direct debits

IRD number
tax/product type
payment period

Pay by post
- cheque (exception arrangement)

Prior IR approval necessary
IRD number
tax/product type
payment period

Read our submission on ED0221

Read here

SPS 20/01: Tax payments when received in time

Read more

Inland Revenue's home page on cheques

Learn more

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