We wanted to outline this first to get the information out there. The IRD has come a long way in trying to make the process easier for individual New Zealanders. If you are a salaried employee and have uncomplicated financial affairs, you may never (or rarely) deal with the IRD. But when it comes to requesting a tax refund assessment, the process is done online and follows a standard procedure.

The IRD released two guidance videos in early 2018 to outline the process; we've included these below to illustrate their efforts and demystify the the tax refund process. You can watch all of them in less than 5 minutes and gain a lot of confidence in doing your tax refund claim yourself.

Many people are entitled to a tax refund but they may not realize it. People who should consider seeking a tax refund include:

• School children with after school jobs
• Temporary employees only working a few months a year
• Low wage earners
• People with two or more jobs
• People who changed jobs in the year (i.e. had more than one employer)
• People who stopped working and went overseas for part of the year 
• People who have investments which earn interest and/or dividends.

• People who worked for part of the year
• People who received a lump sum payment (such as a bonus or redundancy)
• People who paid donations

• People who have tax-deductible expenses to claim

• People who were entitled to the independent earner tax credit but didn’t claim all of it during the tax year.

The IRD states that "most beneficiaries, salary and wage earners will have paid the right amount of tax and won't be eligible for a refund" but it is a quick task to make sure with myIR and chances are you will be entitled to a refund if you are one of the people mentioned in the list above. 

As one MoneyHub reader emailed us: "I've submitted tax returns for my children ever since they had their first part-time job in school. They have always received a small refund - which is big to them, given their hourly wage. Now it's much easier with the tax refund tool online. As such, I encourage everyone to make the effort and apply for a tax refund". - Iain, Nelson
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Tax refunds are free money. It may be obvious, but let's make it clear - the IRD doesn't charge you to make a claim, nor does it penalize you in any way or form in another tax year.​ Even if you are to receive a refund of $20, it's important to proceed with the refund. Don't put it in the "I can't be bothered" basket.

Completing the tax refund process will make you more comfortable with the process and build up a history with the IRD. And above all that, it's money owed to you, so you should absolutely collect on it. 

Tax refund companies are everywhere now. But what they do isn't anything more than the IRD believes you can do yourself. What they do is fairly basic - they assess the tax paid and see if you're owed a refund. They then pay you that refund less their fee. What is important to know is that these companies usually become your "tax agent" meaning they manage your tax affairs on your behalf. This gives them the right to charge you fees accordingly. 

Our view

• We don't believe you need one. Ever. The fees charged would suggest what they do is complicated and skilled, but it's not. The IRD makes it easy for you, and you can call them for free if you need help. 
• There have been numerous media reports about everyday Kiwis losing around 20% of their refund in fees, which they are not too happy about. 
• Our tax refund agents overview below provides further details. Fair Go has reported on one company as well - click here to watch the story.  
• Tax refund agents are automatically assigned as your tax refund agent in years to come, which means they will continue to claim your refunds, receive your money and charge a fee before paying you the rest. If you have a tax refund agent and want to break free, we cover this in the next point. 

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If you've previously signed up to companies such as MyTaxRefund, KiwiTaxRefund and Woohoo, they will automatically be appointed as your tax agent. This means the IRD will pay them any money you are owed, and after they take off their fees and charges, they'll pass the remainder to you.

You can easily get back control in three easy steps:

1. Log in to myIR and REMOVE your tax refund company. 
It takes less than one minute. Go to My Details > My Tax Agent. If you have a tax agent listed, this is where you'll see it. You can remove it using secure mail. Secure Mail is under the "Tools" section on the first page you see when you login to the IRD website.  

If you prefer to do it over the phone, contact the IRD and request that you would like to be de-linked from your tax refund company, also known as a PTSI (personal tax summary intermediary). The IRD will then cancel the company's association with you and make you the primary contact for your tax affairs. 

2. Double check that the IRD has your correct bank account number 
You need to receive your refund without any hassles. Problems arise when you set yourself as your own tax agent per the above steps, but the tax refund company's bank account stays on your details, meaning THEY get your money and you then have to deal with them and pay their fees even after you've cancelled your agreement. 

You can easily navigate to your bank details within myIR and submit any changes you need to make. 

3. Call your tax refund company and tell them you have removed them as your tax agent. 
They cannot do anything once you've removed their name from your IRD tax details, but this is a useful step in case things get nasty. If the tax agent has already advised you of your expected refund or prepared your tax details, you will probably have to pay their fee per the agreement, but it's worth checking and asking for a refund on any fees paid. 

If you want to get everything writing to be sure there is no dispute later, you can send an email and keep a copy of that email. 

Once the above three steps are completed, you can be assured your tax refunds will always be deposited in your bank account and you won't lose any of the money on fees and charges. 

1. Have you given donations to any registered charities? If the answer is YES, you can be refunded 33.33% of your donation with the charity donations tax credit. For example, if you donated $100 to the SPCA, the IRD will refund you $33.33. There are some minor restrictions, but the IRD's Donation guide makes it clear as to what you need to do to get your money back. 

2. Are you single, employed and earning up to $48,000? If the answer is yes, you are entitled to the Independent earner tax credit (IETC). Per the IRD, the Independent earner tax credit (IETC) is an "entitlement for individuals who earn between $24,000 and $48,000 (after expenses and losses) a year". It is an alternative to the Working for Families Tax Credits which single people without children wouldn't receive.  

How much can I get?
It depends on your earnings bracket:

• $24,000 to $44,000 - you'll get $10 per week ($520 a year)
• $44,001 to $48,000 - your entitlement will reduce by 13 cents for every dollar you earn over $44,000.

If you've already been paid your entitlement, then you don't need to do anything. However, if you haven't received it, you can claim your full IETC entitlement when you request your personal tax summary (PTS) from myIR. You just need to tell the IRD that you're entitled to IETC. 

How does IETC work?

• Quite simply, your IETC entitlement reduces the tax you needed to pay for the year
• If you qualify for IETC and haven't received it, then by default you will have paid too much tax
• Overpaying tax leads to a tax refund and the IRD has more details in their IETC guide. 

Reality: Any refund will be paid in July if you have submitted the correct information. The IRD works best when you play your part and help it out.

1. Firstly, complete your tax refund online using myIR and make sure all of your details are correct. This makes it easy for their team to assess your information and process your tax refund without needing to ask for any more information.  
2. Secondly, ask the IRD to deposit your money into a bank account. Check your bank account details are correct. This will avoid any errors later on. Following these tips will ensure your IRD tax refund is processed without any delays. 

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Reality: The IRD takes April and May to fully calculate your tax position, and provides timing details. In almost all cases, the tax refund is paid in July. 
 
According to the IRD website:
“If you are due a refund, this will be ready in June 2018” and “we’ll keep you updated by sending text updates along the way; we’ll also let you know when it’s time to update your other income and expense details if you have any, for example income from interest and dividends, or income protection insurance premiums”.

The IRD’s work is to make sure your tax details are complete. If you have overpaid income tax on interest and/or dividends from investments, the IRD is committed to calculating the over-payment and returning it to you.

• From April to May: The IRD collects your income information from your employer(s)
• May to June: The IRD calculates if you’re due a tax refund for the last year
• July: Tax refund payment month

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Reality: In most cases, this is not the case at all.
 
For most individuals, what a tax agent will claim on your behalf is exactly the same as what you can claim from the IRD yourself. This means there is no advantage in terms of bigger refunds, and you will need to pay a commission or fee to the agent which means you’ll ultimately end up with less money. Unless you run your own business and/or have your own tax accountant, whereby in some cases they will handle your tax affairs and expense claims, there is no financial advantage whatsoever in using a tax agent.  
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Answer: In summary, nothing unless you want to pay up. The IRD’s process lets you use their online calculator to see what money you are due back from the IRD or, alternatively, what money you owe. And you will be shown either number BEFORE you decide to submit your personal tax assessment. 

​If the calculator tells you that you owe the IRD money, you are under no obligation to go any further. It’s common for Kiwis to just close down the browser and think nothing more of it. The underpaid tax will not affect your tax refund in the next tax year either – there are no carry overs. You can get a clean slate as the IRD’s assessment only looks at the most recent tax year.

Before you get nervous, the IRD is reasonably accurate when it comes to calculating income tax and instances of individuals owing the IRD money are far less common than instances of tax refunds being available. 

Answer: A tax refund can happen due to one or many factors. For example, did you take a break during the year, go overseas for an extended period, change jobs and/or work more hours than you planned to? These can be just some of the reasons.

​While a sizeable refund may seem as unusual as it is appreciated, the IRD is the ultimate authority and knows more than any Payroll officer or accounts person at your employer. Their calculation of whether you’ve paid too much or too little tax is the only thing that matters. 

Answer: PAYE is fairly accurate if you have been in stable employment and have not had a pay rise or experienced any irregularities. If you had a regular pay period (week, fortnight, month) for the same amount for the whole year (April 1st to March 31st) then you will have a lower likelihood of a tax refund. 
 
The more you deviate from the situation above, the larger the possibility of being due a tax refund.  For example, not working for half of the year, going on maternity leave (see below) or taking a second job for part of the year all increase your likelihood of a tax refund.
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Answer: Most probably, yes. PAYE would have been paid all year based on the full year salary despite not working for a full year. Even if you’ve claimed benefits from WINZ, the IRD will have a record of everything and ultimately a tax refund is more than likely. With myIR you’ll be able to register, log in and follow the simple process that calculates your refund due. Every year, women on maternity leave receive some of the most sizeable tax refunds.
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Answer: MoneyHub has read reports of conversations between tax refund agents and their customers. Most are honest, but some are not and have been reported to scare customers into retaining their services. You are under no legal obligation to apply for a tax refund. If you don't want to do the simple process with the IRD, you can simply not apply for a refund and there is certainly no law against it. 
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