Correcting errors within a year
Payers can correct errors occurring within a tax year, regardless of their size. There is no need to let us know about these errors.
Correcting errors from earlier years
Errors relating to earlier years can be corrected if the total value of the adjustment does not exceed the larger of either:
- 5% of the payer’s withholding liability for the tax type that the error relates to (for example, RWT or NRWT) for the year in which the first payment is made.
How errors relating to earlier years are corrected depends on whether they result in too much or too little tax being deducted, and the type of income.
The following processes only apply to errors made by payers of investment income. They do not apply to errors made by recipients of investment income.
Correcting RWT and NRWT errors from earlier years
How errors in RWT and NRWT are corrected depends on whether the error results in too much or too little tax being deducted.
Errors resulting in too little tax being deducted
Payers can correct errors that result in too little tax being deducted from income without having to pay penalties and interest.
Where payers discover they haven’t deducted enough RWT or NRWT from a person’s income, they can:
- deduct it from later payments made to the person
- ask the person to pay the amount that wasn’t deducted
- adjust the amount of taxable income (only for non-cash dividends).
Corrections must be made before the next due date for reporting investment income to us (provided it’s reasonably practicable to do so). The information we require is the:
- name, IRD number, and contact address of the payer
- name and contact address (email, street address or mobile phone number) of the person who received the income
- IRD number and date of birth of the person who received the income (if the payer has it)
- adjustments made to the investment income information originally provided.
Errors resulting in too much tax being deducted
Payers can correct errors that result in too much tax being deducted from income.
Payers can refund tax withheld in error any time before the 20th of April following the end of the tax year in which the error occurred, provided they have not provided the person who received the income with:
- an end-of-year withholding tax certificate for RWT
- a shareholder dividend statement, or
- a statement to a member who received a taxable Maori authority distribution.
Payers must provide us with the amount of the refund at the time it is paid so that we don’t also provide a refund.
If the amount isn’t refunded by the 20th of April following the end of the tax year in which the error occurred, payers must provide us and/or the recipient with the amount to be refunded by the 20th of April.
Where the over-deduction has already been paid to us, we will pay the refund to the:
- payer if future payments to the person have been adjusted
- person who received the income if future payments have not been adjusted.