Part 3: Finding information on Inland Revenue's website

3.1
In this Part, we describe the results of user testing of Inland Revenue's website. We asked two groups of taxpayers facing a new tax obligation to find information on Inland Revenue's website. We describe:

• how the tradespeople had a difficult time understanding their tax obligations;
• how the rental property owners thought they could understand their tax obligations; and
• obstacles we identified through the user testing.

3.2
We expected Inland Revenue to produce written and online materials for taxpayers that were clearly structured and written so that taxpayers could easily understand them. To test this, we hired an independent research firm that specialises in testing the usability of websites.

3.3
The independent research firm asked 10 people to determine their tax obligations using Inland Revenue's website. Five were tradespeople who were employees and were starting (or planning to start) to get paid directly for extra work, and five were people who have recently bought (or plan to buy) a rental property (for ease of reference, "rental property owners").

3.4
The purpose of user testing is to identify problems with materials such as a website or a publication. User testing should not be confused with a survey that is designed to understand a group's views or beliefs and that requires a much larger sample. Research suggests that 85% of usage problems are identified by the first five people, so this number of people is commonly used for user testing.

3.5
Appendix 2 provides more information on how the user testing was carried out.

Summary

3.6
When viewing the home page of Inland Revenue's website, the tradespeople participating in the user testing were unsure where to start. They did not see options that made sense to them and did not know whether they should be looking under the section for individuals or the section for businesses. The user testing found that Inland Revenue's website did not help the tradespeople understand their tax obligations.

3.7
The rental property owners participating in the user testing seemed more confident, but they too were not sure whether they should be looking in the section for individuals or the section for businesses. Although the rental property owners appeared more confident using the website, several of them failed to find the right forms and guides. The rental property owners rated the website more highly than the tradespeople did.

3.8
Overall, Inland Revenue's website presumes that taxpayers will know whether they should look at the business or individual pages on the website. In our view, when people's circumstances appear to overlap, the website does not offer clear direction or guidance.

3.9
Once people find a section that discusses their situation, the name and number of the right form or guide is unlikely to be listed or available on the same page as the explanatory material. Instead, people need to search the section that lists all forms and guides.

Tradespeople had a difficult time understanding their tax obligations

Tradespeople participating in the user testing generally believed it would be difficult to pay tax and did not find it easy to understand their obligations using Inland Revenue's website. Some of the tradespeople indicated that they would be more likely to pay tax if it were easier for them to do so.

3.10
Before the tradespeople began using Inland Revenue's website, they were asked about their expectations. Many of the tradespeople felt that the process of paying tax would be complicated, and they were also unsure of what the process involved.

3.11
Because the tradespeople expected the process to be difficult, they also expressed a general reluctance to pay tax on jobs paid in cash. Some of the tradespeople in our testing indicated that they would be willing to pay tax if it were easier for them do to so.

If there was a simple way of just saying to the client "Look, I have to pay tax on top of that", and [be paid it] ... if there was an easy place to put it [on Inland Revenue's website], that would be all right.

3.12
The tradespeople were asked to use Inland Revenue's website to establish what tax they would need to pay and how they would pay that tax. After using Inland Revenue's website, none of the tradespeople were confident about what form they would need to file to declare their income when a customer paid them for a job in cash.

3.13
In general, the tradespeople participating in the user testing felt that they would need additional help to understand their tax obligations. They said they would get this information by either talking with a friend or family member or calling Inland Revenue. In one tradesperson's words:

I'd have to ask someone to walk me through it. I don't understand any of it. Just the lingo. I don't understand any of it.

3.14
Overall, Inland Revenue's website did not make it easy for the tradespeople to understand their tax obligations.

3.15
Because tradespeople can be paid for their work in cash, there is a high risk that they will not comply with their tax obligations. Detecting cash transactions is difficult and creates additional costs for Inland Revenue. Because of the difficulty and cost in detecting cash transactions, Inland Revenue needs to pay particular attention to making it easy for people receiving cash payments to understand and comply with their tax obligations.

3.16
In our view, Inland Revenue needs to consider how it can better present material on its website so that taxpayers are able to find and understand information that is relevant to their circumstances. Doing so may encourage people who operate on a cash basis to declare their income.

Rental property owners thought they could understand their obligations

Rental property owners participating in the user testing generally felt that they could find the information they needed that would allow them to pay their tax. However, some participants found information that they thought was relevant but in fact was not.

3.17
Rental property owners participating in the user testing felt that it would be hard for them to understand their tax obligations. However, participants appeared prepared to put in enough time so that they could understand their tax obligations.

3.18
They rated the website more highly than the tradespeople did, and one rental property owner rated the site very highly because she was very confident that she had found the correct information. However, the moderator was not certain that this rental property owner was looking at the right form – she had started in the business section and was looking at highly technical tax information for commercial landlords. Some of the other participants also found information they thought was relevant to their situation but that did not apply to them.

3.19
We asked the participants whether they would feel comfortable filing their tax returns on their own, and most of the rental property owners said they would be. However, most said they would be likely to use a tax agent if they needed to pay tax on income from a rental property. The rental property owners felt that, by using a tax agent, they would owe less in tax than if they filed their returns on their own. These findings are consistent with the general behaviour of rental property owners, where about 68% use a tax agent.

3.20
Overall, the rental property owners were generally able to find enough information to feel they understood their tax obligations. However, participants did have some difficulties finding particular items of information and were confused by some parts of the website. We discuss the obstacles that we identified during the user testing in the rest of this Part.

User testing identified a number of obstacles for participants

Participants had trouble identifying where they should start to look for information, because they had trouble deciding whether they were considered an individual or a business. Participants also had difficulty understanding the terms used and finding information relevant to their personal circumstances.

3.21
All of the tradespeople taking part in the user testing had difficulty with how and where they should look for information on Inland Revenue's website. Some of the rental property owners also found it difficult to determine where they should begin to look for information about their obligations.

3.22
Navigating Inland Revenue's website will generally require a user to look for information created either for businesses or for individuals. The tradespeople and the rental property owners participating in the user testing found it difficult to place themselves in one of these groups. This made it more difficult for them to find the information they were looking for. As one rental property owner described it:

Individuals and families would be a good one to start but I don't think it would be in that category, because when you have a rental property it is more like a business, so I'd probably like to check under that.

3.23
The tradespeople were looking for terms that would help to drive them towards the information they were looking for. As one tradesperson stated:

For me specifically, the title or key words I'd be looking for haven't popped into my head yet … cash jobs, declaring cash jobs … what are your obligations?

3.24
When the tradespeople could not find a clear starting point, they would use the search function on Inland Revenue's website. All of the tradespeople tried searching Inland Revenue's website, but the search terms that they were using did not match the terms used by Inland Revenue.

3.25
Most of the tradespeople taking part in the user testing did not find it easy to understand the terms used on Inland Revenue's website. The rental property owners could not always easily understand the practical meaning of what they were reading. The rental property owners also indicated they might need to read the information again or look for another source for this information, separate from Inland Revenue's website.

3.26
The tradespeople and the rental property owners noted that they would find it useful if Inland Revenue's website clearly identified which information was relevant for their individual circumstances. One tradesperson described the process he had to go through to get information:

I understand where they are going with it, but I had to find the topic first and then found out what to fill out, rather than finding out about me first.

3.27
One property owner stated:

If they had scenarios "Are you an earner in this bracket and you want to rent a property, go to here" etc. And you just press a button and it takes you on an express bus to the place.

3.28
Inland Revenue is aware that it could improve its website and is considering doing so. In our view, Inland Revenue needs to reconsider whether all taxpayers can be expected to understand Inland Revenue's distinction between "business" and "individual".