Tech-savvy taxpayers getting net results
More than a million tax refunds are now paid each year, and more than half are requested through online tax refund services.
Though people can apply to the Inland Revenue Department (IRD) each year to check if they are due a tax refund, it was only with the advent of tax refund web services six years ago that seeking refunds became a common practice in many people's annual financial timetables.
And an Official Information Act request by Lester Binns, the chief executive of MyTax.co.nz, shows just how many more refunds are now paid.
In the 2008, 09,10, 11, and 12 tax years, refunds processed through the online tax refunds industry were just over $720 million, though the amount going into people's pockets was less as that did not include the industry fees paid.
Add the $183m from the 2013 tax year up to October 21, 2013, and the sum rises to just over $900m.
"Until the industry came along, all this money would have defaulted back to Treasury," Binns said.
His company is one of three that command more than 90 per cent of the market.
There are now around a quarter of a million more refunds issued by number than before the online tax refund industry was born.
But despite the explosive growth of the industry, Binns says there's still growth potential as around a million people are neither applying directly to the taxman to see if they are due a refund or using one of the tax refund websites to do it for them.
Binns said after six years in business his company was facilitating tax refunds of over $500,000 a week for customers, but the young were particularly highly represented among the one million not seeking refunds for overpaid tax.
"The hardest ones to get to are the young people," he said. "Perhaps they lack financial literacy, or don't really care."
Also proving hard to reach were some ethnic minorities, Binns said, who might fear interacting with the tax authorities.
Binn theorises that fear of "engaging with the tax man", or the belief that an inquiry could trigger a demand for more tax, were sticking points for many.
After surveying just under 1400 of its customers, MyTax.co.nz found idleness played a part in their decision-making. When asked how long a refund would have taken if they had to do it themselves, the highest proportion of respondents (28 per cent) answered forever, because they weren't good at that sort of thing.
In a bid to get more to seek a refund, the web services have developed mobile apps, and now, Binns said, 30-40 per cent of refunds are sought from mobile devices.
And continued growth is occurring. This year Binns said MyTax.co.nz will grow up to 40 per cent.
The survey also revealed how customers spent their refunds. Some 36 per cent spent it paying bills, 29 per cent on luxuries for themselves, 21 per cent saved it, 12 per cent spent it on the kids, and just 2 per cent bought something for their spouse. An optimistic 0.25 per cent spent it on Lotto tickets. That last one indicates that some refunds are small, though Binns says the average refund for those customers who get one is $460.
- Sunday Star Times
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