Making tax easier
Today the New Zealand Inland Revenue Department (IRD) launched a 6 week consultation process to fundamentally change the way it receives information from small businesses and individuals.
Over the next 2 years, it wants to transform a predominately paper based process to one which is entirely electronic. That means that all businesses and individuals will be required to submit their tax information electronically, either by themselves, or through an agent.
What is very important to note in this change is the IRD has seen the innovation and private sector investment being made in small business solutions. Under this proposal it is effectively moving from a ‘retail’ relationship with tax payers to a ‘wholesale’ one. It will work with a number of intermediaries who will provide these services and connect to the IRD.
A Public/Private sector partnership where all parties win
- The Government will save money
- Private sector solution providers can provide a more compelling service
- Small businesses and individuals will save time and money
Time is right for this initiative
- The use of the Internet is now pervasive
- There are private sector companies, like Xero, investing substantially in this market
- The upcoming wave of low cost netbooks and computers have made access to the Internet affordable
The IRD has been watching what has been happening with Internet developments and has proactively sought expert opinion from the industry. The adoption of FaceBook Connect on its website demonstrates that it’s in touch with changes in the technology world.
What is the impact?
- All small businesses are now forced to either work directly through their own secure space on the Inland Revenue website or work with an agent who is connected. If they are not yet using an electronic system they will have to.
- Small business solution vendors, especially accounting and payroll suppliers will have to substantially modify their software over the next two years
So this is one of the biggest changes to small business technology over the the past 10 years.
The role of the advisor
At Xero we believe that the secret to small business productivity is connecting businesses to advisors. As such our approach will be to put accountants and other advisors in the middle of this interaction. Xero will facilitate accountants and other advisers becoming agents for small business owners. This is a major opportunity for advisors to add more value and drive small business productivity across the country.
Xero has always seen an initiative like this as a natural opportunity that comes from a cloud computing approach to small business compliance. We are closely involved in the process with the IRD and will continue to invest in our accountant-centric approach.
The IRD is seeking feedback on its website.
9 June 2010 #
10 June 2010 #