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Tax refund season – what consumers and tax agents need to know

7 April 2017

With the end of the financial year upon us, consumers may find a tax agent at their door or on the phone.

“Consumers need to know that if the phone rings or there’s a knock at the door and they buy goods or services, they may have entered into an uninvited direct sale (UDS) and some important legal protections for consumers will apply,” said Antonia Horrocks, the Commerce Commission’s General Manager, Competition.

“We have just warned a tax agent for entering into a UDS and failing to provide the correct written information to consumers and we want to remind all tax agents of their obligations where they enter into a UDS,” said Ms Horrocks.

The Commission has warned My Tax Agent Limited T/A Savvy Tax Agent (Savvy Tax), for failing to meet the disclosure requirements relating to a UDS agreement.

“Savvy Tax did not always provide its customers with a written agreement at the time the agreement was entered into. It would provide an agreement if a customer asked for one, but that is not sufficient. All tax agents must ensure that they provide a copy of the written agreement at the time an agreement is made,” said Ms Horrocks.

Agents are also reminded that consumers must be told of their right to cancel before an agreement is entered into. This right to cancel must also be set out on the front page of the UDS agreement.

Neither the agreement nor a brochure Savvy Tax provided to consumers included information about the right to cancel. Savvy Tax has since changed its agreement so it is clearer to consumers.

The Commission is also contacting other tax agents to alert them to the Savvy Tax warning, and to discuss compliance with them.

Background

The uninvited direct sale (UDS) provisions of the Fair Trading Act came into effect in June 2014.

They apply where the price of goods or services is more than $100 or can’t be ascertained at the time the agreement is entered into. That may be the case with tax refunds where the price will be a proportion of an as yet unknown amount.

A UDS agreement must describe the goods or services being supplied, set out both the supplier’s and the consumer’s contact details, and the total price payable under the agreement.

More information can be found in the Commission’s fact sheet.

If consumers think they might be due a tax refund, they can apply for one through Inland Revenue’s no obligation tax refund process.

A representative from the Inland Revenue advised that most beneficiaries, salary and wage earners who have received the same income for the duration of the year will have paid the right amount of tax and won't be eligible for a refund.