The Inland Revenue Department (IRD) is clarifying wording on its website after Kiwis mistakenly believed the Government agency was sneakily siphoning their income tax refunds to pay off student loan debt.
There was outrage on Monday after a post on a student community Facebook page stated the IRD was now automatically taking New Zealanders' tax refunds unless they made a manual change on the myIR website - something most Kiwis wouldn't know to do.
The uproar was particularly acute given the timing; cash-strapped Kiwis were under the impression the IRD was sneaking off with their money during the COVID-19 crisis, when it's needed most.
However the IRD says claims of shady dealings are misguided, as the overpayment settings customers see relate only to student loan overpayments - not income tax refunds - and is able to be refunded.
"You get student loan overpayments credited to your IR student loan account, and this credit is automatically used to pay off more of your student loan unless you manually request that it be refunded. Inland Revenue will advise you when an overpayment happens," a spokesperson told Newshub.
"As per student loan legislation, any overpayment of student loan assessments remains on the customer's loan by default but is able to be refunded at customer request.
"Until recently, student loan customers needed to contact Inland Revenue to request a refund of their student loan overpayment. Student loan customers can now do this by changing their overpayment settings in their myIR accounts."
While the uproar was a misunderstanding, the IRD admits the phrasing on its website may have contributed to the confusion. A spokesperson told Newshub it would now be changed for clarification.
"We will adjust the wording around this to make it clearer that the settings relate to student loan overpayments only."
Most New Zealanders who are eligible for a tax refund will get it automatically paid into their bank account or via a cheque in the mail. Only those who are self-employed need to complete an individual tax return.