The last couple of years or so has seen an increase in the number of companies in New Zealand that process tax refunds. They advertise by telling the public something like ”you could be owed a tax refund for the last five years. If any refunds owed are unclaimed after 5 years you lose it. We can check that for you, no refund no fee.”
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Yes, it is true that you can claim refunds owed from the last 5 years and that if it is left unclaimed for more than five years you lose it. What they don’t tell you for obvious reasons is that you can do it yourself. Since it is just about that time of the year when you can claim a refund for the 2010 tax year, I thought I would write a post on how you can do it yourself and save you a bit of money.
These tax refund companies charge fees that range from 12.5% to about 30% (the highest I came across) of the refund amount owed to you. Depending on how much is owed to you, this figure could creep up into hundreds. In a couple of cases I have known it to go into the thousands but some of the companies do have a cap (one company had a cap of $500) on how much they will charge you. All that they are doing to get their hands on this information is getting a bit of personal information from you, a few figures from the Inland Revenue Department (IRD) and doing a few calculations to see if you are owed a refund or not.
The process of doing it yourself and getting to keep all of your hard earned cash is pretty simple. Here is a basic (I say basic because if applicable you may need have a bit more information at hand suck as Working for Families figures if you are receiving it) step by step guide on how to do it yourself:
- Call IRD and ask them to send out a Summary of Earnings which they will mail out to you (if you are registered for their online services you can log into you account and get all the information you need there) or you can simple call them and ask them for your income details. You will also need to have the foll0wing information at had (if applicable):
– any interest, dividend or taxable Māori authority distribution details
– whether you’re entitled to one of the low income rebates
– details of any expenses you can claim
- Enter the required information into their online calculator Individual income tax – calculators and worksheets which will tell you if you may be owed a refund or not
- If you may be owed a refund, get in touch with IRD and request a personal tax and they will then process an application for a refund
Note: if after doing your calculations it turns out that you owe them money you can chose to keep quiet and do nothing until they start bugging you for it.
Doing all of that yourself really isn’t that hard and it wont take a lot of your time. If you are due a refund in the end it is you who will gain. A simple lack of that little bit of information that you can process your own refund leads us to literally give away some of our money for nothing. Now that you have that bit of information are you still going to get someone else to check whether or not you are due for a refund?