- CA ANZ says paying tax is an obligation and everything possible must be done to support voluntary compliance (including support for payment)
- We acknowledge that cheque usage is becoming more and more infrequent and the technology required to support this payment method is quickly becoming outdated
- CA ANZ stresses that some taxpayers will require a lot of support to shift to alternative payment methods and some may not be able to change
Time's up for cheques
Inland Revenue and the Accident Compensation Corporation (ACC) recently announced that from March next year they will no longer accepting cheques from customers "who are able to use alternative payment options". This change initially surfaced as part of Inland Revenue's consultation on its statement SPS 19/01 Tax payments – when received in time in 2018.
Chartered Accountants ANZ has also engaged with Inland Revenue following the most recent announcement and our position remains that paying tax is an obligation for all taxpayers. Therefore, everything possible must be done to support voluntary compliance (including support for all legitimate forms of payment).
CA ANZ acknowledges that cheque usage is becoming more and more infrequent, and the technology relied on by banks and other institutions to process cheques is quickly becoming outdated. Some banks have announced that from 2020 they will not issue or process cheques and there are increasing signs that cheques will no longer be used in the near future. But for the time being, there remains a group (albeit a decreasing number) of the population that regularly uses cheques.
In our discussions with Inland Revenue, we have stressed that some taxpayers will require a lot of support to shift to alternative payment methods, and that some may not be able to change. These taxpayers include:
- the very elderly
- those in very rural areas with limited or unreliable internet access
- trusts and not-for-profits where co-signatories are required.
CA ANZ is eager to consult further with Inland Revenue regarding how this change will work practically and to ensure disruption to taxpayers is minimised. We hope there will be clear guidance issued shortly to help taxpayers transition to other payment methods.
Cheques and payments
While most New Zealanders consider cheques to be legal tender, technically they are bills of exchange. While this sounds like legal semantics, it actually means a person, e.g. a shopkeeper, can refuse to accept payment by cheque.
Legal tender is defined in section 27 of the Reserve Bank of New Zealand Act 1989 (this act defines "legal tender" as bank notes and coins issued under the RBNZA). The legal meaning of "cheque" is set out in section 73(1) of the Bills of Exchange Act 1908 to mean a bill of exchange drawn on a bank that is payable on demand. However, the presentation of a cheque does not unconditionally discharge a debt as it is necessary for the recipient of the cheque to still present it for payment (and, subsequently, for the funds to clear).
When the changes announced by Inland Revenue take effect in March 2020, alternative ways of making tax payments to Inland Revenue will include:
- electronic via internet banking or direct debit in MyIR
- debit/credit card over the phone, through the unauthenticated payment page on the Inland Revenue website, and through myIR
- direct debit in myIR
- cash or eftpos but only at Westpac branches (they're not accepted at Inland Revenue offices).
We want to hear your feedback
The NZ Tax Team has already heard from a number of members who have shared their views and client’s experiences relating to the ability to make payments by cheque. You can email your thoughts or feedback to the NZ Tax Team directly.Email us