Part 4: Review of a selection of Inland Revenue's forms and guides

Inland Revenue Department: Making it easy to comply.

In this Part, we describe the result of our review of some of Inland Revenue's forms and guides. We assessed whether the forms and guides are useful tools for a taxpayer who is trying to understand their obligations and submit the right information.

We reviewed two different IR 3 forms, along with their guides, and three additional guides that Inland Revenue provides for taxpayers. We selected forms and guides that taxpayers starting to receive income from a rental property or from self-employment would use.

We used a checklist of good practice expectations about how documents should be presented to the public to assess each form or guide (see Appendix 1).

How the forms and guides could be improved

The forms and guides we reviewed were professionally presented and provided a range of useful information. Often, we needed to refer to a form's guide to understand that form. One of the guides we reviewed tried to do too much.

The forms and guides we reviewed were professionally presented, with consistent layout (or exceptions that made sense) and branding. In general, the documents were logically structured and the guides had comprehensive lists of their contents. The authors of the documents tried to use plain English.

The purpose of the forms we reviewed was not always as clear as it could have been. For example, the purpose of the IR 3 individual tax return form is not stated at the top of the first page. Instead, small print at the top of the form directs a person to read "pages 7 and 8 in the guide to see if you need to complete this return". However, the form does not state which guide it is referring to. Likewise, the IR 3R rental income form does not have a clear purpose statement at the start, so information about who needs to complete it – all taxpayers, all taxpayers who pay rent, or all owners of a rental property – is implied rather than obvious.

Taxpayers who are trying to pay tax on income received from business activities or rental property for the first time will need to be told which form to fill out, or they will need to read the separate guide for each form to determine whether it is the correct form to use.

When we reviewed the IR 320 Smart business guide, we found that having a guide for multiple types of taxpayers made it more difficult to understand the usefulness and relevance of the guide. This guide is meant to apply to businesses ranging from sole traders (with no staff) to small- and medium-sized enterprises (businesses with staff or paying GST and having up to $100 million in annual turnover) and non-profit organisations. Although we acknowledge that the guide is designed for multiple audiences, we consider that it was trying to cater to too many different types of readers. For instance, the introduction suggests that there should be a separate guide for people running non-profit organisations:

There are, however, certain tax rules that only apply to non-profit organisations. If you are running a non-profit organisation and need more information go to or call us.

In our view, the information in this guide would be more useful if it was in separate guides. Taxpayers could then find the guide that was most relevant to their circumstances.

Views of tradespeople and rental property owners

Two of the guides we reviewed were of direct relevance to the situations of the people who took part in our user testing. We asked all of our participants to briefly review either the Smart business guide or the Rental income guide.

After reviewing the Smart business guide, the tradespeople were generally positive about it but still had difficulties understanding some of the terms used. They did not see the relevance of the guide to their situation and were looking for terms that were not used by Inland Revenue. This made them question the usefulness of the guide.

The rental property owners found the Rental income guide to be very helpful, and some of the participants asked if they could take it with them. As one stated:

They've got examples and lots of notes, and my first impression is that everything is covered that I'd want to know.

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