Finance – A new financial year

This is a good time to get ready for the financial year ahead by preparing for the many income tax changes that have been mentioned in this column.

Some changes have not seen as much publicity as others, but they will still affect a number of people.

I am sure most of you will be aware of the increase in the maximum tax rate from 33 percent to 39 percent on income over $180,000. With this increase will come the urge to try and reduce taxable income below this point.

The IRD will be keeping a close watch on businesses and people that fall into this bracket where they feel there may be a likely increase in potential tax evasion with the primary aim of avoiding the 39 percent tax rate.

The IRD has launched a construction industry education campaign as an attempt to help people in that industry understand their tax obligations and discourage cash jobs.

I would encourage anyone who is self-employed to take this an opportunity to make sure your income is being recorded correctly and become familiar with what is expected from you from a tax point of view. If you are unsure or need clarity on your requirements, get in touch with an accountant or tax agent for advice.

When it comes to child support, the Government is looking at removing penalties on unpaid child support as a way to encourage greater compliance and greater engagement from parents who are liable. The IRD has found that the penalties charged for unpaid child support are actually deterring people from meeting their obligations and those penalties start mounting up, making it hard for these obligations to be met.

From late May to July 2021, people can expect to start seeing their 2021 tax assessments coming through from the IRD.

By this stage, all your tax details should be updated with your financial institutions and the reporting of your investment income should be going through to the IRD.

If you notice that information is missing or incorrect, please get in touch with the IRD.